Table Of Content
Discover Bank CDs
APY Range
Minimum Deposit
Terms
Our Rating
Discover Bank CDs
APY Range
Minimum Deposit
Terms
Our Rating
What Are The Discover Bank CDs Rates?
Generally, shorter-term CDs, such as three or six-month CDs, offer the lowest rates. For example, a three-month CD only provides a rate of 2.00%, which is not so attractive when you compare it with other banks 3-month CD rates. However, the rates increase once you get to 12-month CDs and beyond.
However, if you don't want to tie up your funds for five years, the rates for two to four years are only slightly lower, and the 12-month CD rate is very respectable with “/sc] APY.
Here are the rates as of March 2025:
CD Term | APY | Early Withdrawal Penalty |
|---|---|---|
3 Months | 2.00% | 3 months interest |
6 Months | 3.70% | 3 months interest |
9 Months | 3.80% | 3 months interest |
12 Months | 4.00% | 6 months interest |
18 Months | 3.80%
| 6 months interest |
24 Months | 3.50% | 6 months interest |
30 Months | 3.40% | 6 months interest |
36 Months | 3.40% | 6 months interest |
48 Months | 3.40% | 9 months interest |
60 Months | 3.40% | 18 months interest |
120 Months | 3.40% | 24 months interest |
How Discover CDs Work?
All Discover CDs require a minimum deposit of $2,500, but you can select a term of three months to ten years, locking in your rate for your desired term. The Discover CD rates vary according to your selected term.
Unfortunately, Discover does not offer a no penalty CD, so if you need access to your funds before your CD matures, you will incur a penalty.
The specific penalty will depend on your CD term. If your CD term is less than one year, you’ll pay three months of simple interest, but this increases to six months of simple interest for CD terms of one to four years.
You’ll pay nine months of simple interest for CD terms of four to five years, 18 months of simple interest for CD terms of five to seven years and the maximum penalty is 24 months of simple interest if your CD has a term of seven to ten years.
Due to the high rates on various CD terms, Discover provides an excellent option for a CD ladder. Investors can deposit and build a CD ladder strategy. If you're wondering how to build a CD ladder, it involves dividing your investment across multiple certificates of deposit with varying maturity dates.
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How Much Can You Earn If You Deposit $10,000 Today?
In case you deposit $10,000 to Discover CD, here you can calculate the expected earnings (before tax) in case the interest is compounded daily:
* Make sure to adjust APY, terms and deposit
Are Discover CD Rates Competitive Compared to Other Banks?
Considering the national average for CD rates is just 1.73% for 12 months, Discover CDs are competitive. Even if you opt for a shorter term of less than one year, you can access a rate which is approximately the national average. However, you can access far higher rates with longer term CDs.
In direct comparisons with traditional banks, Discover CDs are highly competitive. Since you may struggle to access higher rates with the typical high street bank, Discover is a very attractive option. It becomes a little trickier when we compare Discover with other online banks.
For example, while the Discover rates are very similar to the Capital One CD rates, Capital One does not require a minimum deposit. However, Capital One has fewer term options, with no three-month CD and no terms longer than five years.
So, if you want to verify that Discover is offering the most competitive deal, you’ll need to check the small print of comparable products.
Discover CD Rates vs Discover Savings Rates
If you’re unsure whether a Discover CD is the right choice for you, it is logical to look at the Discover saving account options. Discover has a high-yield online savings account, which offers a highly competitive rate.
In fact, this rate is higher than you would get with a CD term of less than 12 months and you have no restrictions on being able to access your funds.
If you are interested in the highest possible rates, the Discover savings account cannot beat the CD rates for products with a term of over 12 months. However, there are some crucial differences between these products that may determine which is the best for you.
Firstly, there is no minimum deposit or balance requirement for the Discover savings account. So, if you don’t have $2,500, you can still access the respectable savings rate.
We’ve already touched on the potential to withdraw your funds, but the savings account also provides the flexibility to add to your account. You can pay in additional funds at any time, making it a better choice for those who are looking to build a savings fund.
Discover CD Rates vs Money Market Account Rates
Both Discover CDs and the Discover Money Market account require a minimum deposit of $2,500, but you are not required to maintain a minimum balance with the Money Market account.
While the rates on the Money Market account are lower than the rates for CDs with a term of more than 12 months, you have no restrictions on access for your funds.
You can access your money at any time via debit, check, or ATM. This provides greater flexibility compared to the CDs, where you’re tied into a set period or you’ll incur an early withdrawal fee.
So, if getting the maximum possible rate is your first priority, Discover CDs are a better choice for you. On the other hand, if you’re prepared for a lower rate in exchange for greater flexibility, you may prefer the Money Market account.
About Discover Bank
Discover has a track record of offering financial products that dates back over 30 years. In fact, the first Discover credit card was used back in 1985.
However, the brand expanded its product line and started offering savings products approximately ten years ago. This started out with savings and CD accounts, but today, Discover also offers personal and home loans, IRAs and a checking account.
Discover aims to be the leading digital bank with a company mission of helping people to achieve a brighter financial future. Here you can read more on Discover bank pros and cons.
FAQs
Does Discover Offer No Penalty CD Rates?
No, Discover does not currently have a no penalty CD., which provides an excellent option for those who may need the money in the short term.
Does Discover offer promotions on CDs?
Discover does not currently have any CD promotions.
Does Discover CDs come with a grace period?
When your CD matures, there is a nine day grace period. During this time, you can make changes to the CD including withdrawing some or all of the funds with no withdrawal penalty.
You can also close out the CD and open another one with a different term. However, after the grace period, the CD will automatically renew.
How Discover CDs interest are calculated?
The interest on your Discover CD will be compounded daily and added to your account monthly.
Which Discover CDs will earn you the most money?
You’ll get the highest APY on Discover CDs with a term of five years or longer.
How does the Discover early withdrawal penalty work?
The penalty is based on simple interest and varies according to your CD term. You’ll pay three to 24 months of simple interest depending on whether your term is less than one year or up to 10 years.
How We Rate Certificates of Deposits: Our Methodology
The Smart Investor team has thoroughly examined certificate of deposit (CD) offerings from various banks, considering multiple factors to provide a comprehensive evaluation. Here's how we rated them across four key categories:
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CD Rates (50%): We meticulously analyzed the interest rates offered by each bank on their certificate of deposit (CD) products. Higher ratings were awarded to banks offering competitive rates that provide maximum returns for customers' investments. Factors such as the yield curve, current market conditions, and consistency of rates were considered to assess the attractiveness of each bank's CD rates.
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CD Features (30%): This category evaluated the features associated with each bank's certificate of deposit offerings. Factors considered include the variety of terms available, early withdrawal penalties, minimum deposit requirements, and any additional features or benefits. Higher ratings were given to banks offering a diverse range of CD terms, reasonable early withdrawal fees, and flexible options to meet customers' investment needs.
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Customer Experience (10%): A positive customer experience is paramount, even when investing in CDs. We assessed each bank's performance in this area, considering factors such as the ease of opening a CD account, the responsiveness of customer service, and overall user satisfaction. Higher ratings were assigned to banks with efficient account opening processes, helpful customer support, and a track record of satisfying customers.
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Bank Reputation (10%): The reputation of a bank is a critical consideration when investing in CDs. We evaluated each bank's reputation based on factors such as financial stability, regulatory compliance, and public perception. Higher ratings were given to banks with a solid reputation for reliability and trustworthiness, ensuring customers' investments are safe and secure.
By considering these categories and assigning appropriate weights to each, our review aims to provide valuable insights to help individuals make informed decisions when investing in certificate of deposits.
