Table Of Content
Discover is best known for its credit cards, but in recent years, this financial institution has begun to be recognized for its banking products including its savings account and CDs.
Discover CDs are available with terms of up to 10 years and carry no maintenance fees. Discover CD rates are considered to be some of the most competitive in the market, but we’ll delve into this in more detail below.
Discover Bank CDs
APY Range
Minimum Deposit
Terms
Fees
Discover Bank CDs
APY Range
Minimum Deposit
Terms
Fees
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.
What Are The Discover Bank CDs Rates?
Generally, shorter term CDs such as the three or six month CDs offer the lowest rates. For example, a three month CD only offers a rate of 2.00%. However, once you get to 12 month CDs and beyond, the rates start to increase.
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 a very respectable with 4.50% APY.
Here are the rates as of March 2023:
CD Term | APY | Early Withdrawal Penalty |
|---|---|---|
3 Months | 2.00% | 3 months interest |
6 Months | 3.40% | 3 months interest |
9 Months | 3.50% | 3 months interest |
12 Months | 4.50% | 6 months interest |
18 Months | 4.75%
| 6 months interest |
24 Months | 4.30% | 6 months interest |
30 Months | 4.30% | 6 months interest |
36 Months | 4.30% | 6 months interest |
48 Months | 4.10% | 9 months interest |
60 Months | 4.10% | 18 months interest |
120 Months | 4.10% | 24 months interest |
How Much Can You Earn If You Deposit $100,000 Today?
In case you deposit $100,00 to Discover CD, here are the expected earnings (before tax) in case the interest is compounded daily:
CD Term | APY | Interest Earned |
|---|---|---|
3 Months | 2.00% | $494 |
6 Months | 3.40% | $1,691 |
9 Months | 3.50% | $2,623 |
12 Months | 4.50% | $4,538 |
18 Months | 4.75%
| $7,280 |
24 Months | 4.30% | $8,852 |
30 Months | 4.30% | $11,185
|
36 Months | 4.30% | $13,567 |
48 Months | 4.10% | $17,556 |
60 Months | 4.10% | $22,407 |
120 Months | 4.10% | $49,834 |
Although the rates are still lower than inflation, CDs are one of the safest and most attractive yields in inflation times.
Are Discover CD Rates Competitive Compared to Other Banks?
Considering the national average for CD rates is just 1.53% 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. When we compare Discover with other online banks, it becomes a little trickier.
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. The main CD drawback is that you cannot make more than six withdrawals in any calendar month.
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.
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.
Compare Discover Bank
Discover Bank vs Capital One
Discover Bank is a full-service online bank as well as a provider of payment services. Discover can be used for banking and retirement planning by individuals. Discover is best known for its credit cards with rewards, but it also provides personal, student, and home equity loans.
Capital One began as a credit card company, but it has grown to offer a diverse range of traditional banking services over the years. In addition to credit cards, it offers checking and savings accounts, loan refinancing, auto finance, and children's accounts. As a result, Capital One is more appealing to those seeking a traditional banking experience.
Read Full Comparison: Discover vs Capital One: Which Bank Account Wins?
Discover Bank vs Chase Bank
The Discover checking account is more traditional. While the account does not pay interest, you can earn 1% cash back on debit card purchases. There are also no fees if you require a replacement debit card, have a deposit item returned, or have insufficient funds in your account.
Chase offers a wide range of banking products, including savings accounts, checking accounts, home loans, home equity options, auto loans, and a wide range of credit cards. In addition, Chase's customer service system is quite extensive.
Read Full Comparison: Discover vs Chase: Which Bank Account Suits You Best?
Discover vs Citi
Discover began as a credit card company and has since expanded into banking services. As a result, it stands to reason that Discover would offer a diverse range of credit cards. Discover offers a simpler checking account. There are no account fees or minimum deposits, and you can earn 0.40 percent.
Citi offers home loans, personal loans, lines of credit, wealth management options, and investments, as well as everyday and premium banking services. This exemplifies Citi's viability as a viable alternative to the traditional high-street bank.
Read Full Comparison: Discover vs Citi: Compare Banking Options
Discover vs CIT Bank
The CIT Bank eChecking account pays 0.10 percent to 0.25 percent interest. The account also has almost no fees. Only if you have a stopped payment, a returned item, or want to make a wire transfer will you be charged a fee. There is also free ATM access, with up to $30 in ATM fee reimbursements per month if you incur fees when using another bank's machine.
While Discover's checking account does not pay interest, you can earn 1% cash back on debit card purchases. There are no fees, as with eChecking. If you need a replacement debit card, have insufficient funds, or have a deposit returned, you will not be charged a fee.
Read Full Comparison: CIT Bank vs Discover: Which Bank Account Wins?
Discover vs Bank of America
Since its inception as a credit card provider, Discover has come a long way.Of course, credit cards are available, but you can also get home loans, personal loans, and a variety of checking and savings products such as retirement accounts, CDs, and money market accounts.
Bank of America offers a far more comprehensive range of banking services. There are numerous credit card options, as well as various savings and checking accounts.
Bank of America also provides mortgages, auto loans, and investments. This makes switching from a traditional bank much easier because you won't have to compromise on your banking products.
Read Full Comparison: Discover vs Bank of America: Compare Bank
Discover vs SoFi
Chase and Wells Fargo appear to offer very similar products at first glance, so we need to dig a little deeper. There is little to distinguish the savings accounts, and both banks provide a variety of checking accounts.
While Chase's account maintenance fee is slightly higher, it does have some more interesting features. Chase also has an advantage in terms of CDs, but Wells Fargo is a better option for loans and mortgages.
Read Full Comparison: Chase vs Wells Fargo: Where to Save Your Money?
