Discover Bank offers 12 certificate of deposit terms ranging from three months to 10 years. While some other banks do offer more options, Discover Bank still allows you to open certificate of deposit (CD) accounts to save for short-term as well as longer-term goals like a down payment on a house.
You will have to have at least $2,500 to open a Discover CD. This may be a little high, especially when compared to other banks’ minimum deposit requirements of around $500 or even $0. However, the upside of a bigger deposit is that your money can grow more than it would with a small deposit.
Luckily, you won't have to worry about paying a monthly fee with a Discover CD account.
|Discover CD||Minimum Deposit||Rate|
|3 Month||$2,500||0.35%||Compare CD Rates|
|6 Month||$2,500||0.65%||Compare CD Rates|
|9 Month||$2,500||0.70%||Compare CD Rates|
|12 Month||$2,500||2.25%||Compare CD Rates|
|18 Month||$2,500||2.35%||Compare CD Rates|
|24 Month||$2,500||2.45%||Compare CD Rates|
|30 Month||$2,500||2.45%||Compare CD Rates|
|3 Year||$2,500||2.50%||Compare CD Rates|
|4 Year||$2,500||2.60%||Compare CD Rates|
|5 Year||$2,500||2.85%||Compare CD Rates|
|7 Year||$2,500||2.90%||Compare CD Rates|
|10 Year||$2,500||2.95%||Compare CD Rates|
Overview of Discover CDs
With 12 available CD terms, Discover allows you to open an account for a variety of financial goals whether long term or short term. This also makes for a perfect CD ladder structure. A CD ladder is when you open multiple CD accounts at the same time, each with a different maturity date. That way, you can have a payout every few months or so, depending on the ladder you create.
You will need at least $2,500 to open a Discover CD account. Again, this is pretty high when compared to other banks’ minimums. However, it does yield larger earnings over time, especially with Discover’s strong CD interest rates.
It’s important to remember that CDs are timed deposits. You can only access the funds you’ve deposited into the account when it reaches maturity. Once it matures, you have a nine-day grace period to make any withdrawals or additional deposits you want. Before that, however, an early withdrawal can trigger a penalty.
If you’ve just opened a new CD and you make any withdrawals starting from the eighth day after opening and continuing for the next 22 days, you’ll face a penalty that costs each day’s simple interest on the amount withdrawn. For renewed CDs, the same penalty applies if you make a withdrawal from the end of the grace period through the following 20 days. Outside of these timeframes, your penalty will depend on your CD length. For terms less than a year, you’ll face a penalty of three months’ simple interest. For terms between one and four years, the penalty is six months of simple interest. Terms of four to five years charge a penalty of nine months of simple interest. Terms of five to seven years charge a penalty of 18 months’ simple interest and, finally, terms of seven years or longer charge a penalty of 24 months’ simple interest.
How Much You Earn With Discover Certificate of Deposits Over Time
You stand to earn the most with Discover’s longer-term CDs. You’ll see below that with a 3-month CD, you’ll only earn a few dollars on your deposit at the end of the term. With a longer term, however, like 12 or 60 months would can see growth of hundreds of dollars. Again, this depends on your initial deposit, too.
Discover does boost your growth by compounding interest daily. This grows your money faster and more efficiently than monthly compounding, for example. Daily compounding means your deposit will earn interest today, that new amount will earn interest tomorrow and so on. The amounts below reflect your possible final earnings at the end of each account's term.
|Initial Deposit||3-Month CD||12-Month CD||60-Month CD|
How Discover CDs Rates Compare to Other Banks
Discover offers some of the best CD rates in the industry. This is due to the bank’s lack of physical locations throughout the country which makes more room for higher-earning rates. As you can see below, Discover’s rates come very close to those of other online banks like Ally Bank and Marcus by Goldman Sachs. Discover’s 3-year CD and 5-year CD rates reach higher than Ally’s. Plus, while Marcus’ rates are higher for longer-term accounts, Discover offers a better rate for the 6-month CD option.
At $2,500, Discover requires a higher minimum deposit than the other banks do. Marcus’ minimum comes in at $500. Ally doesn’t have a minimum deposit requirement, allowing you to deposit whatever amounts you can. This means that if you can only put away $50 responsibly, Ally will let you do that. It is important to note that higher balances can get you better rates and earnings. The Ally Bank rates given below are for its High Yield CDs’ lowest tier.
|CD Account||Discover||Ally Bank||Marcus by Goldman Sachs|
Should You Get a Discover CD Account?
Discover offers some solid CD account options. Its rates outperform most big bank competitors like Chase CDs or Bank of America CDs. Plus, the rate your account will earn at is pretty straightforward since it does not depend on your account balance.
Discover is a good option if you want to keep your bank accounts all in one place, each with a high-earning interest rate. You do just have to make sure you can meet the bank’s minimum deposit requirements.