Discover CD Rates
Discover is well-known for their credit card products. However, they are also a national online bank offering convenient checking and savings accounts online, money market accounts, IRAs and Certificate of Deposits. Discover prides itself on the simplicity of their CD products, the free extra features they provide for customers and the fact that they have virtually no hidden fees to worry about.
Discover has been around since the mid-1980s and won the J.D. Power Award Administration award for 'Customer Satisfaction' two years in a row. Customers have contributed many positive, 5-star reviews regarding the banks service, and financial products including their credit cards, savings accounts, and CDs. If you're looking open up a CD and take advantage of competitive interest rates and terms, you can check out more about what Discover has to offer below.
Features and Benefits
Like many other banks, Discover offers CDs with higher interest rates depending on the term. Their rates range from .35% to 2.27%. Interest is calculated daily and credited monthly. They offer flexible terms anywhere from 3 months to 10 years and their interest rates beat other leading banking institutions like Wells Fargo, Bank of America and Chase.
There is a minimum deposit amount of $2,500 and a maximum amount of $750,000 if you choose to open a CD with Discover. All funds on deposit at Discover Bank are FDIC insured up to the maximum amount allows by the law so you can rest assured knowing that your funds will be safe.
If you'd like to set up a CD ladder, Discover Bank will assist you with setting up your account and offer tips and resources to help you make the most of your investment.
If you are interested in investing in your retirement, Discover also offers both Roth IRA and traditional IRA CDs depending on your preference. With a Roth IRA CD, you invest after you pay the taxes on the money and it grows so it can be tax free when it's time to withdraw the money. With a traditional IRA CD, you invest before paying taxes on the deposit and any interest that gets compounded. Then, you'll be expected to pay taxes on the money you withdraw.
Discover has received pretty impressive reviews overall regarding their CD products. On the contrary, some customers have complained about the subpar interest rates for lower terms. For example, if you deposit, the minimum amount of $2,500 with a 3 month term, you will only receive about $2.19 in interest. If you add six months to that, you'll receive $8.14 and if you add a year to that, you'll receive $25.02 in compounded interest.
Going through the entire application process and depositing over $2,000 just to earn two dollars a few months later may not seem worth the effort which leaves potential and current customers to wonder why Discover offers such short terms.
As with almost all CDs the more you deposit, the more you will earn, even if the term is shorter.
Other cons include the minimum deposit amount that Discover requires along with their penalty fees for withdrawing your funds early. For example, if you choose to withdraw funds before the maturity date when you've had your CD for less than a year, you will be charged 3months' simple interest on the principal amount withdrawn. If you've had your CD open for longer, you could be subjected to 6 to 9 months of interest on the principal if you withdraw early.
Discover's fees are a bit higher than other competitors' so it's best to stick to your maturity date to avoid paying any penalties.
Setting Up and Managing Your Account
Setting up your account is quick and easy. You will start by submitting your personal information like your address, phone, email and social security number. Then you will fund your account and receive a confirmation email and a Welcome Kit from Discover. Discover describes their process for opening an account as simplified and easy to accomplish in just a few minutes.
You can fund your account by setting up an automatic transfer, paying by phone (this option is only available for your initial transfer when you are just setting your account up), or by sending a check in the mail that includes your CD account number.
Once you set up your CD, you can manage your account online and take advantage of Discover's convenient mobile app. Discover will send you a notification 30 days before your CD matures. Once it matures, you can make a deposit or withdrawal and change the term of your CD during a 9-day grace period.
Helpful Tools and Resources
Like most other online banks, Discover provides a tool on their site that allows you to estimate how much interest you can earn based on the term and the amount you deposit. Discover has a blog page and FAQ section specifically dedicated to certificates of deposit. Customers can learn specifically what fees are associated with their account along with more details about interest and early withdrawal penalties.
Customer service is available by phone 24/7 with U.S.-based banking specialists to help assist you in any way. Discover also includes a collection of ratings and reviews on their site from real customers. The authentic reviews might help you learn more about other's experience with the bank and what they like and didn't like.
Verdict - Very Good
While Discover does have a minimum requirement to meet in order to open up a CD, their interest rates and level of service make up for it. They offer variety in terms of their low risk/ high-yield FDIC-insured CD products allowing you to invest in your retirement if you wish instead of just opening a regular CD.
Discover allows you to see a quick return on a larger investment thanks to their various different term options. It is a great idea for people who have a substantial amount to deposit, but it can also be suitable for people who wish to deposit an amount close to the minimum long term create a profitable CD ladder system. Customers can enjoy easy account set up and convenient management tools and resources along with a customer service department that is always available.