Discover CD Rates Review

Discover Bank's CD account offers high rates and no hidden fees. But is the term worth it? Read this review before you open a CD.

Certificate of Deposit
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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

While known for their credit cards, Discover is an online financial institution that also offers traditional bank accounts, including:

• Certificates of Deposit (CD)
  
• Checking
  
• Savings
  
• Money Market

A CD is a type of deposit account offered by most major banks. Unlike a traditional savings, 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 to the account after your initial deposit.

During a CD's life, your savings accumulate interest at a fixed rate. The rate depends on the duration, which can typically range from 3 months to 10 years. Once the CD reaches maturity, you can take out both the initial investment and all accumulated interest.

Keep reading for a look at Discover Bank CD rates.

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) CD rates:

How Discover CD Rates Compare

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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:

FEES AND RESTRICTIONS

The fee structure for CDs is listed on its website. Discover CDs all have a required $2,500 minimum deposit. But you'll pay NO:

• Monthly maintenance fees
  
• Charge to deposit via wire transfer from an external bank

Transferring funds to an external bank via wire transfer costs $30. Discover also charges an early withdrawal penalty as follows:

The penalty is automatically deducted from the amount you withdraw before the CD ends.

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.

At Maturity
Discover sends alerts to all CD owners 30 days before your CD matures. Once the CD matures, you can:

• Withdraw all of the money from the account

• Reinvest into another CD of the same or different term

Discover gives CD owners a 9-day grace period after maturity to decide among the options. 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 fund or "rainy day fund," since you'll incur a penalty by withdrawing early.

HOW TO GET STARTED

To open a Discover CD account, follow these steps:

1. Visit Discover.

2. 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. To open an account, you'll need your personal contact information including:
   • Name
     
   • Birthdate
     
   • Address
     
   • Social Security number
     
   • Employment status
     
   • Discover CD offer code (if applicable)

3. Choose the CD you want to open and enter your deposit amount.

4. Once your application is approved, you have 45 days to fund the CD. Funding options include:
   • 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 interest.

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 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: Is Discover CD Rates Good?

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.