Overview

1. Discover Bank Certificates of Deposit (CDs)

• Our Rating: 4/5 stars

• Initial Deposit Required: $2,500

• 1-Year APY: 4.70%, 3-Year APY: 3.75%

Insight: Although Discover Bank demands a substantial minimum deposit to open a CD account, their certificate of deposit offerings are remarkably competitive when compared to the top CD rates currently available in the market. With term lengths spanning from three months to an impressive ten years, finding a suitable maturity period that aligns with your specific savings strategy becomes a straightforward task. Notably, some of Discover Bank’s most attractive rates are on par with those offered by the leading online banking institutions.

2. Elevate Your Savings with High-Yield CDs Across Extended Terms

For those seeking to maximize the growth of their savings, Discover Bank presents an enticing opportunity with their certificate of deposit (CD) products, which offer predominantly competitive interest rates coupled with a diverse range of term lengths.

Benefits:

• Attractive interest rates for terms of one year or longer

• Diverse maturity options

Potential Drawbacks:

• Interest rates tend to be consistent across many of the longer-term offerings

Discover Bank CD Rates

Explore Discover Bank’s Certificate of Deposit (CD) options, boasting attractive rates ranging from 2.00% APY for a 3-month CD to an enticing 4.70% APY for a 12-month CD.

For instance, their 3-month CD offers a 2.00% APY, while longer terms, such as the 12-month CD, yield up to 4.70% APY. The rates are as follows:

3-month CD terms: 2.00% APY, 6-month CD terms: 4.25% APY, 9-month CD terms: 4.25% APY, 12-month CD terms: 4.70% APY, 18-month CD terms: 4.40% APY, 24-month CD terms: 4.00% APY, 30-month CD terms: 3.75% APY, 36-month CD terms: 3.75% APY, 48-month CD terms: 3.75% APY, 60-month CD terms: 3.75% APY, 84-month CD terms: 3.75% APY, 120-month CD terms: 3.75% APY

(Please note that the APYs mentioned are accurate at the time of writing and are subject to change without prior notice. The applicable rates will be determined and fixed for the chosen term upon account funding. These offerings pertain to personal accounts exclusively.)

Discover Bank CD Overview

• Initial Deposit Requirement: $2,500 minimum

• Interest Accrual: Interest is compounded daily and credited to the account monthly

• Term Options: CD terms range from 3 months to 10 years

• Monthly Fees: None

1. Diverse CD Terms: Discover Bank provides a range of CD terms from 3 months to 10 years, with APYs varying from 2.00% to 4.70%. However, higher APYs typically require committing savings for 1-5 years.

2. Limited Rate Variability: While Discover offers various CD terms, many terms yield similar rates, offering little incentive for long-term investment.

3. Interest Handling: Your interest is compounded daily and credited monthly. Additionally, managing your CD account is convenient with Discover’s mobile app.

4. Competitive Edge: While the minimum opening deposit of $2,500 may be higher than some competitors, Discover Bank’s CD rates are competitive, often surpassing those of traditional banks and remaining on par with online-only banks.

How to Activate a Discover CD

Discover Bank offers a convenient online process for establishing a new Certificate of Deposit (CD) account. The initial step involves providing your personal details, including your Social Security number and contact information. Upon submission, you’ll receive a confirmation email from Discover containing your account credentials.

To officially activate your CD, you’ll need to make an initial deposit of $2,500 or more at your convenience. Discover allows you to open multiple CDs simultaneously, enabling you to create a CD ladder strategy.

Funding your Discover CD can be accomplished through three different methods:

• Online transfer: You can transfer funds from an existing Discover Bank account or an external bank account.

• Telephone transfer: You can initiate the initial funding process by calling Discover Bank and providing your account information over the phone. Note that this option is only available for the initial deposit and cannot be used for subsequent additions to your CD.

• Mailing a check: You can send a check made payable to yourself, including your CD account number, to the following address: Discover Bank, PO Box 30417, Salt Lake City, UT 84130.

After your CD reaches its maturity date, you have a nine-day grace period during which you can withdraw your funds or choose a new term. If you do not take any action, your CD will automatically renew for the same term.

Early Withdrawal Penalties

Certificates of Deposit (CDs) serve the purpose of safeguarding your funds, making them inaccessible for a predetermined period. Should you decide to withdraw your funds prematurely, you will incur an early withdrawal penalty, calculated as a percentage of the interest accrued. The magnitude of these penalties varies according to the duration of your CD.

Outlined below are the early withdrawal penalties for Discover CDs:

• Terms under 1 year: Equivalent to 3 months’ worth of simple interest

• 1 year to less than 4 years: Equivalent to 6 months’ worth of simple interest

• 4 years to less than 5 years: Equivalent to 9 months’ worth of simple interest

• 5 years to less than 7 years: Equivalent to 18 months’ worth of simple interest

• Terms spanning 7 to 10 years: Equivalent to 24 months’ worth of simple interest

Early withdrawal penalties can significantly diminish your potential returns, underscoring the importance of avoiding premature withdrawals whenever feasible. If the possibility of requiring access to cash before your investment matures concerns you, exploring a no-penalty CD could be advantageous. While these CDs typically offer lower interest rates compared to traditional CDs, they afford the flexibility of accessing funds in emergencies.

Additionally, a CD ladder presents another strategic option. This method involves diversifying your investment across various CD terms. By combining both long-term and short-term CDs, such as leveraging longer 2- to 5-year terms alongside shorter 6- and 12-month CDs, you can capitalize on the higher interest rates associated with longer durations while maintaining liquidity as shorter-term CDs mature.

Discover CD FAQ

Q1: What are the interest rates offered by Discover Bank for CDs?

A1: The interest rates for Discover CDs range from 2.00% to 4.70%, depending on the duration of the term. Discover’s rates are competitive with those of online-exclusive banks and tend to surpass the national averages, as per FDIC data.

Q2: If I need to withdraw funds from a Discover CD before it reaches maturity, what penalties apply?

A2: Early withdrawal from a Discover CD before its maturity date will result in a penalty fee. The amount of this penalty varies, with shorter-term CDs incurring a lesser fee, while longer-term CDs attract a higher penalty. It is advisable to maintain your emergency savings in a liquid savings account, which allows for quick and penalty-free access to your funds.

Q3: How can I avoid incurring an early withdrawal penalty on my Discover CD?

A3: To circumvent an early withdrawal penalty on your Discover CD, you must either wait until the CD reaches its maturity date or opt for a no-penalty CD, which permits withdrawals before maturity without incurring any fees. An alternative strategy is to establish a CD ladder, where you invest in multiple CDs with staggered maturity dates, allowing you to access a portion of your funds at regular intervals without penalties.