Discover CD Rates Review
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Discover Bank's CD account offers high rates and no hidden fees. But is the term length worth it? Read this in-depth review before you open a CD.
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- 2.00% APY for 12-month term
- 2.05% APY for 24-month term
- 2.10% APY for 5-year term
Certificate of Deposit
Discover Bank is an online financial institution offering traditional accounts, including:
A CD is a type of deposit account offered by most major banks. Unlike a traditional savings account, CDs "lock up" your funds for a set period of time.
Banks typically charge a penalty if you withdraw money early. You also can't add more money to the account after your initial deposit.
During a CD's term, your savings accumulate interest at a fixed rate. The rate depends on the term, which can typically range from 3 months to 10 years. Once the CD reaches maturity, you can withdraw both the initial investment and all accumulated interest.
Keep reading for a look at Discover Bank CD rates.
Discover is FDIC insured, just like a traditional bank. In the unlikely event that the bank closes, the money in your accounts is insured up to $250,000. Discover is owned by Discover Financial, the issuer of the popular Discover It credit card.
DISCOVER BANK CD RATES
All of Discover's CDs require a minimum deposit of $2,500 to open. Here's a look at their Annual Percentage Yield (APY) rates by term:
| CD Term | Annual Percentage Yield (APY) |
|---|---|
| 3 Months | 0.35% |
| 6 Months | 0.65% |
| 9 Months | 0.70% |
| 1 Year | 2.00% |
| 1.5 Years | 2.00% |
| 2 Years | 2.05% |
| 2.5 Years | 2.05% |
| 3 Years | 2.05% |
| 4 Years | 2.05% |
| 5 Years | 2.10% |
| 7 Years | 2.15% |
| 10 Years | 2.20% |
APY, or Annual Percentage Yield, is the amount of money your deposit accounts will earn in interest in one year. Unlike interest rate, APY takes in account how interest compounds over time.
How Discover Bank CD Rates Compare
Discover's CD rates are competitive with other online banks. Some, such as TIAA Bank and Synchrony Bank, may offer higher APY rates but usually require a higher minimum deposits than Discover's $2,500.
When compared to other banks with brick-and-mortar locations, Discover's CD rates are generally superior. Here's a look at the numbers:
| Bank | APY |
|---|---|
| Wells Fargo | Standard Term CD: 0.05% - 0.35% APY. Terms of 3 months to 1 year. Minimum deposit of $2,500. Special CD: 1.15% - 1.50% APY. Terms of 9, 29, and 39 months. Minimum deposit of $5,000. Bonus of up to 1.55% APY if you maintain a linked Wells Fargo Prime/Portfolio Checking account. |
| Citibank | 0.05% - 1.75% APY. Terms ranging from 3 months to 5 years. Minimum opening deposit is $1,000 in CA, and NV, $2,500 in MD, DC, VA, and FL, $500 in all other markets. |
| Bank of America | Standard Term CD: 0.03% - 0.75% APY. Terms of 28 days to 10 years. Minimum deposit of $1,000. Featured CD: 0.07% - 1.60% APY. Terms of 12, 13, 25, and 37 months. Minimum deposit of $10,000. |
Start by opening multiple CDs with varying term lengths. When the first CD reaches maturity, you reinvest the money (and accrued interest) into another, often longer-term CD. Repeat this with every CD in the "ladder."
Just be aware that once that money is deposited into a CD, you won't be able to access it again for the entire length of the term.
FEES AND RESTRICTIONS
The fee structure for CDs is listed on its website. Discover CDs all have a $2,500 minimum deposit. But you'll pay NO:
- Monthly maintenance fees
- Charge to deposit money via wire transfer from an external bank
Transferring money to an external bank via wire transfer costs $30. Discover also charges an early withdrawal penalty as follows:
| Term | Penalty |
|---|---|
| < 1 Year | 3 Months Simple Interest |
| 1 Year to 3 Years | 6 Months Simple Interest |
| 4 Years | 9 Months Simple Interest |
| 5 Years | 18 Months Simple Interest |
| 7 to 10 Years | 24 Months Simple Interest |
The penalty is automatically deducted from the amount you withdraw before the CD term ends.
Deposit requirements vary by bank. Discover Bank's $2,500 miminum is on the higher side. Marcus by Goldman Sachs, for example, has a $500 minimum.
Here's a list of banks that offer CD accounts with no minimum deposit:
- Capital One
- Ally
- American Express
HOW TO WITHDRAW MONEY
Before Maturity
Withdrawing any of the money you deposited before the term ends will result in a penalty. But you can withdraw interest accumulated during the CD's term.
However, that interest will no longer compound, which lowers the total value by the end of the CD's term.
At Maturity
Discover sends alerts to all CD owners 30 days before an account reaches maturity. Once the account matures, you can:
- Withdraw all of the money from the account
- Reinvest that money into another CD of the same or different term
Discover gives CD owners a 9-day grace period after maturity to decide. If you don't act by the end of the grace period, the bank will automatically renew your funds into another CD of the same term.
WHO SHOULD GET A CD?
CDs are great for people who can afford to put aside money for a set amount of time. Often, they are used for a specific goal including:
- Major purchases (a car or engagement ring)
- Vacations
- Down payment on a home
You should never use a CD as your emergency deposit account or "rainy day fund," since you'll incur a penalty by withdrawing the money early.
Questions about opening a Discover Bank CD or other online banking needs? You can speak with a customer service representative 24 hours a day, 7 days a week by calling: 1-800-347-7000.
HOW TO GET STARTED
To open a Discover Bank CD account, follow these steps:
- Visit Discover.
- Choose the "New to Discover" option if you've never opened an account with the bank before. If you already have an account, log into it by entering your:
- Name
- Birthdate
- Address
- Social Security number
- Employment status
- Discover CD offer code (if applicable)
- Name
- Choose the term of CD you want to open and enter your deposit amount.
- Once your application is approved, you have 45 days to fund the account. This can be done via:
- Wire transfer from another bank
- Transferring funds over the phone (which you can only do when initially funding the account)
- Mailing a check to Discover (payable to you with your CD account number on the memo line)
Discover Bank Mailing Address
Discover Bank
PO Box 30417
Salt Lake City, UT 84130
After that, your new CD is set up and can begin actively earning money.
Other Discover Bank Accounts
Discover also offers a variety of other deposit accounts, including:
Online Savings
This account has no monthly maintenance fee or minimum deposit requirement. Here's what else it offers:
- 1.7% APY
- Daily compounding interest
- Free online and mobile banking
- FDIC insured
Cashback Checking
This deposit account earn 1% cashback on up to $3,000 in debit card purchases each month. There are no fees or minimum deposit requirements, but the Cashback checking doesn't offer interest.
Other features include:
- No minimum balance requirement
- No fee for online bill pay
- No fee ATM withdrawals at over 60,000 Allpoint® or MoneyPass® ATMs
Money Market
This bank account lets you write checks, pay bills, and make debit card purchases. Other features include:
- Mobile check deposit through the Discover app
- Free debit card and checks
- No fee ATM withdrawals at over 60,000 Allpoint® or MoneyPass® ATMs
Bottom Line
Discover Bank's CDs offer competitive rates for those looking to boost medium to long-term savings. As always, you should shop around first to find the best product and rates for your financial goals.
Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.
Disclaimer: This content was first published on May 22, 2019. This content may have been updated on July 13, 2019. Information including rates, fees, terms and benefits may vary, be out of date, or not applicable to you. Information is provided without warranty. Please check the bank's website for updated information.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. This site may be compensated through the Advertiser's affiliate programs.
Editorial Note: This content is not provided by Discover. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by Discover.
Disclaimer: The information for the Discover it® Cash Back has been collected independently by CreditDonkey. The card details on this page have not been reviewed or provided by the card issuer.
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