With the turmoil in the financial markets from the coronavirus pandemic, plenty of investors are looking for a safe haven for at least part of their portfolios. It’s an excellent idea too.
CDs are the perfect way to add stability to your overall financial plan and protect cash for future stock purchases.
Discover Bank – so well-known for its credit cards – also offers some of the most aggressively priced CD rates in the industry. Once you check out Discover Bank CD rates, you’ll see that it’s one of very the best investments to park your cash for safekeeping.
And if you are already a Discover credit cardholder, you’ll find the arrangement even more convenient.
Discover Bank CD Rates (Updated Daily)
Discover CD rates are as follows:
|Discover Bank 9 Month CD||5.30% APY||$2,500|
|Discover Bank 1 Year CD||5.20% APY||$2,500|
|Discover Bank 18 Month CD||5.00% APY||$2,500|
|Discover Bank 2 Year CD||4.40% APY||$2,500|
|Discover Bank 30 Month CD||4.30% APY||$2,500|
|Discover Bank 3 Year CD||4.30% APY||$2,500|
|Discover Bank 4 Year CD||4.00% APY||$2,500|
|Discover Bank 5 Year CD||4.00% APY||$2,500|
|Discover Bank 7 Year CD||3.80% APY||$2,500|
|Discover Bank 10 Year CD||3.80% APY||$2,500|
|Discover Bank 6 Month CD||3.40% APY||$2,500|
|Discover Bank 3 Month CD||2.00% APY||$2,500|
Discover Bank CDs
Discover Bank offers certificates of deposit with terms ranging from three months to as long as 10 years. That’s important because many banks don’t exceed five years on their CDs. As you’ll see below, the interest rate return becomes progressively higher the longer the CD term runs. The initial minimum required investment for each certificate is $2,500.
There are no fees involved with Discover Bank CDs. That means you’ll retain every dollar of interest you earn on your certificate.
CDs are an excellent way to earmark funds for specific spending purposes. For example, if you plan to buy a house in five years, you can save money in CDs.
Your initial deposits can be set up in a five-year CD. In the second year, you can fund a four-year CD, and so on. It’s a way to keep your money completely safe – for the intended purpose only – and earning money along the way. Few other investments are so effective at saving for medium-term goals.
Discover Bank IRA CDs
Discover Bank gives you the option to choose CDs for either a traditional or Roth IRA account. If you choose a traditional IRA, your contributions to the plan and the CDs will generally be tax-deductible. The interest you’ll earn on your CDs within the traditional IRA will accumulate on a tax-deferred basis.
If you choose to set up a Roth IRA CD account, your contributions will not be tax-deductible. However, the interest on the CD will accumulate on a tax-deferred basis. But if you retain the account until you’re at least 59 ½ years old and have participated in the Roth IRA for a minimum of five years, you could make withdrawals from the account that will be completely tax-free.
Whichever type of Discover Bank IRA CD you choose, Roth or traditional, you will be able to contribute up to $6,000 per year, or $7,000 if you are 50 or older.
Discover Bank CD Features
|Minimum Initial Investment||$2,500|
|Interest Compounding Frequency||Daily|
|Fees||$0; $30 outgoing wire fee for funds transferred out of the certificate.|
|Discover Mobile App||Monitor and manage your Discover Bank CDs (and other Discover products) from the Discover mobile app; available for both iOS and Android devices.|
|CD Maturity Procedures||30 day notice prior to CD maturing. After the maturity date, you’ll have a 9-day grace period to make a change to your CD without incurring a penalty. CD will automatically renew if you do not liquidate within the grace period.|
|Early Withdrawal Penalties||Yes, see below.|
Early Withdrawal Penalties
|CD Term||Prepayment Penalty|
|Less than one year||3 months simple interest|
|One year to less than four years||6 months simple interest|
|Four years to less than five years||9 months simple interest|
|Five years to less than seven years||18 months simple interest|
|Seven years to 10 years||24 months simple interest|
How to Open a Discover Bank CD
Open a Discover Bank CD directly from the Discover Bank website or mobile app. If you’re already a Discover customer, you can simply log into your existing account. But if you’re new to Discover and simply want to open a CD, you’ll need to open an account.
Start by entering personal information, including your full name, Social Security number, date of birth, and your mother’s maiden name. You’ll also need to provide information to verify your identity, as requested in the application, and sign any required disclosures.
Once you enter the basic information, you’ll then choose the account type you want to open. As a CD, you’ll choose the CD term as well as the amount of your initial investment.
Funding your Discover CD
You can fund your Discover Bank CD by transferring funds from another bank, either by phone or by online transfer. But you can also write a check to yourself, and send it to Discover Bank.
Future funding of your Discover Bank CDs can use any of the above methods, but can also be accomplished by a mobile check deposited into your account.
As is the case with nearly all CDs, once you fund a certificate, you will not be able to add additional funds to that CD. Any new funds invested in Discover Bank CDs will need to be moved into a new certificate.
About Discover Bank
Based in Southfield, Michigan, Discover Bank got its start back in 1985, where it was originally launched as part of the Sears organization. The bank operates as an all-online financial services provider, so if you’re looking for local branches you won’t find any. That shouldn’t be a cause for concern, since virtually all banks today are online, and most new banks are similarly operating entirely online.
Best known for its credit cards, Discover offers some of the best rewards credit cards in the industry, under the “Discover it” name.
But Discover has expanded well beyond its award-winning credit card products, and now offers full-service banking. In fact, it’s grown to providing $403 billion in financial services of all kinds to its customer base.
That includes a comprehensive lineup of Discover Bank CDs. Discover CD rates are among the highest in the industry, and well worth investigating if you want to add high interest, completely safe savings instruments to your portfolio.
Other Discover Bank Products
Earlier I mentioned that Discover offers some of the very best cashback credit cards in the industry. That may be what they’re best known for, but in addition to CDs, they also provide the following banking products:
- Discover Checking
- Discover Online Savings
- Discover Student Loans
- Discover Home Equity Lines
- Discover Money Market Account
- Discover Personal Loans
As you can see, even though Discover Bank is an online bank, they provide full-service banking to go along with your Discover Bank CD.
Final Thoughts on Discover Bank CD Rates
CDs serve several critical purposes in every person’s financial situation. Most important, they can provide a corner of your investment portfolio that’s completely safe. But on a more practical level, they’re also the perfect savings vehicles to accumulate funds for an upcoming spending plan.
You may already have CDs at your local bank or credit union. But if you do, it’s unlikely they’re paying rates remotely close to what Discover Bank is paying on their CDs. You can open a CD (or several CDs) with Discover Bank with as little as $2,500.
And since it’s an online bank operating nationally, geography is not a limitation. You can invest in a Discover Bank CD no matter where you live.