Discover Bank’s wide range of certificate of deposits (CDs) offer a solid deal for consumers: reasonably high yields with few fees. The bank scores well on customer service surveys and provides an easy-to-use digital experience via its app and website.
Still, you can find higher rates elsewhere and the opening deposit minimum requirement may be too high if you’re just starting out.
Discover CDs
Discover currently offers the following CDs:
Annual percentage yields (APYs) and account details are accurate as of April 19, 2023.
CD rates tend to be higher for longer terms, however, you’ll quickly notice that the yields above hit their zenith at the 18-month mark.
This is due to two simultaneous developments: the Federal Reserve raising short-term interest rates and market participants expecting the economy to slow down in the near future.
Practically, this means that you should target CDs with terms between 12 and 30 months. The yields from CD with terms shorter than a year are beaten out by some high-yield savings accounts.
Whatever term(s) you choose, all of Discover’s CDs have daily compounding interest and a minimum deposit requirement of $2,500. There are no fees to set up the CDs or maintain them and they’re guaranteed by the Federal Deposit Insurance Corporation (FDIC).
Should you take back your deposit before the term expires, you’ll owe a fee. Early withdrawal fees are:
- Three months simple interest for CDs of less than one year.
- Six months simple interest for CD terms between one and four years.
- Nine months simple interest for CD terms between four and five years.
- 18 months simple interest for CD terms between five and seven years.
- 24 month simple interest for CD terms between seven and 10 years.
How to open a Discover CD
Discover makes it easy to open a CD online.
You start by submitting basic personal information, such as your Social Security number (SSN) and contact details. Once your information is submitted, you’ll receive an email confirmation from Discover with your account information.
To officially open the CD, make your deposit of $2,500 or more at your convenience. You can even open multiple and build a CD ladder.
There are three ways to fund your Discover CD:
- Transfer funds online. You can pull from either an existing Discover bank account or a different external bank account.
- Transfer over the phone. Call and give your information by phone. Note this option is only available for the initial funding of a CD, not any additional deposits.
- Mail a check. Make it out to yourself and include your CD account number. Mail it to: Discover Bank PO Box 30417 Salt Lake City, UT 84130.
You have a nine-day grace period following the maturity of your CD during which time you can withdraw your funds or choose a new term. Otherwise your CD will automatically renew.
How Discover CDs compare
Discover CD rates come in well-above the national average.
Discover also beats out traditional brick-and-mortar offerings, such as those from Bank of America. Yet, it doesn’t come in at the top of the market.
For instance, you can find higher yields on some terms at competitors like Citi, not to mention Sallie Mae or Bread Savings.
Another drawback of Discover CDs is the relatively high minimum deposit requirement. It can be hard to commit $2,500 for several months or even years. Other banks have a much lower threshold or even none at all. Marcus by Goldman Sachs Certificates of Deposit have a $500 minimum deposit and Synchrony has none.
Alternatives to Discover CDs
Discover is a diversified bank, meaning you can find other savings products that may fit your needs.
For instance, the Discover Online Savings Account yields 3.75%, which is higher than the APY on Discover’s CDs with terms of less than a year. The tradeoff, though, is that the savings account yield is subject to change, whereas CDs are fixed for the length of the term.
If you want a bit more account flexibility, such as the ability to write checks and draw cash at ATMs, consider Discover’s Money Market Account, which currently offers a 3.65% APY on deposits with balances less than $100,000.
Frequently asked questions (FAQs)
Discover CDs are covered by FDIC insurance, up to the allowable limits. The FDIC covers $250,000 for each depositor in each deposit ownership category. So all of your individual savings accounts (including your CD) at Discover would be covered up to $250,000. Any joint accounts would be covered for an additional $250,000.
The FDIC provides a deposit insurance estimator to help you calculate your exact coverage. If you’re keeping multiple six figures in deposit accounts, consider spreading them out across different financial institutions to ensure coverage.
There is a withdrawal penalty if you take out funds before your CD matures. The penalty is less on shorter-term CDs and more expensive for longer-term options.
It’s important to keep your emergency savings in a liquid savings account that you can access quickly and with no penalty.
Currently, all of Discover’s CDs require at least $2,500 in order to open an account. Typically banks require some minimum balance, usually between $1,000 and $5,000, though some financial institutions have no such requirement.
