Discover Bank CD Rates

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Certificates of deposit, or CDs, are some of the easiest investment instruments to use. CDs work by depositing a certain amount of money with your bank, the sum of which increases over time via interest for a set term.

Online banks such as Discover Bank typically offer higher, more competitive CD rates than even big banks such as Wells Fargo. Online banks can offer better rates because they don’t have the usual overhead costs that come with managing brick and mortar branches. Discover offers its customers a dozen different CD options to help them with their short- and long-term investment goals.

Here’s a quick look at what you’ll find in this guide to Discover Bank CD rates:

Discover Bank CD Overview

Each bank handles its CDs differently, but most of them share common elements, such as early withdrawal penalties and wire transfer fees. Check out what to expect with a Discover Bank CD:

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Discover Bank CDs
Term Lengths3 months to 10 years
APY Rates2.00% to 4.30%
Minimum Deposit$2,500
Wire Transfer Fees$0 for incoming wire transfers
$30 for outgoing wire transfers
Official Bank Check FeeN/A
Early Withdrawal PenaltiesVary depending on CD term
Grace Period9-day period after the maturity date to adjust CD without incurring a penalty
Rates are updated periodically and subject to change. All other information is accurate as of Jan. 28, 2020.

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What Are Discover Bank’s CD Rates?

You can choose Discover Bank CD terms that last as short as three months to as long as 10 years. In general, the shorter the CD’s term, the lower the annual percentage yield.

Discover Bank CD Rates
3 months2.00%
6 months3.00%
9 months3.00%
1 year4.25%
18 months4.25%
2 years4.30%
30 months4.30%
3 years4.30%
4 years4.30%
5 years4.30%
7 years4.30%
10 years4.30%
Rates are updated periodically and subject to change.

Because Discover is an online bank, its CDs’ APYs are much higher than those typically offered by brick-and-mortar banks. The bank also boasts rates well above the national averages for CDs, according to the Federal Deposit Insurance Corp.

As you can see, Discover Bank offers a wide breadth of term limits. Unlike many other online banks, it also offers CDs with terms longer than six years.

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See: Discover Bank Review — Free Features Worth Checking Out

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Are Discover Bank CDs FDIC-Insured?

Discover Bank is indeed a member of the Federal Deposit Insurance Corp., which insures deposits in the event that the bank holding them fails. There is a limit to coverage: $250,000 per depositor, per ownership category.

See Next: Best Money Market Accounts

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How To Open a Discover Bank CD

Opening a Discover Bank CD is a straightforward process that requires some personal information. First, you’ll enter basic information, including your name, Social Security number or taxpayer ID, date of birth and mother’s maiden name. Then, you’ll enter your account information, which includes your address and contact information. Most importantly, you’ll also select your CD’s term limit and APY, plus how much you wish to deposit.

Discover Bank’s minimum deposit to open a CD is $2,500, and you’ll need to enter your account and routing numbers in order to fund the opening deposit. If you’re already a Discover client, the process is a bit easier since the bank will have your information handy. Plus, if you have the proper funds, you can easily fund the CD with cash from your Discover Bank checking account.

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Related: How To Open a Bank Account Online

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What Happens When My Discover Bank CD Matures?

Once your Discover Bank CD matures, you will have the option of either withdrawing the sum or letting it roll over into another term, thereby accumulating more interest but also lengthening the penalty phase for withdrawing from a CD.

Discover Bank’s policy is to inform you 30 days in advance that your CD is set to mature. If you want to make any changes to your CD, you will have a nine-day grace period to do so from the maturity date. This is an important period to note, as you can make changes to the CD penalty-free.

Discover Bank automatically renews the CD at the same term and rate if you choose not to adjust anything.

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What Happens If I Withdraw From My CD Early?

You will incur a penalty should you withdraw from your CD earlier than the agreed-upon term limit. Discover Bank will charge you a set amount of “simple interest” proportionate to how early the money was withdrawn from the CD. Per Discover Bank, simple interest “is calculated by multiplying the daily interest rate by your principal by the number of days that elapse between payments.” Its simple interest equation uses 30 days for a single month. 

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Here are the penalty amounts:

Discover Bank CD Penalties
CD TermAmount
Less than 1 year3 months simple interest
1-4 years6 months simple interest
4-5 years9 months simple interest
5-7 years18 months simple interest
7-10 years24 months simple interest
Information is accurate as of Jan. 28, 2020.

Excessive dipping into your CD can lead to a loss of principal, which can really affect your return if the CD has a short maturation period.

Learn: Everything You Need To Know About Bank Deposits

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Should I Open a Discover Bank CD?

That depends on your financial goals and funds, but opening a CD can only set you back if you intend to withdraw from the CD before maturity or you need a rotating source of cash that won’t be locked into a CD account.

The biggest drawback to any CD is the inability to withdraw from it at any time since it’s locked in. However, Discover’s CDs also afford customers much more versatility when settling on a comfortable term length. Coupled with relatively high APYs, a Discover CD might be worth looking into if you’re a budding investor or if you just enjoy secure interest.

Up Next: Investing In Certificates of Deposit — The Ultimate Guide

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More on Discover

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Rates are updated periodically and subject to change. All other information is accurate as of Jan. 28, 2020. This content is not provided by Discover Bank. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by Discover Bank.