Sun. Jan 29th, 2023
Discover CD Review: High CD Rates and Several Term Lengths, but Steep Minimum Opening Deposits

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The bottom line: You’ll find Discover CDs appealing if you’d like a competitive CD rate and have a minimum of Discover CD – Minimum Deposit. If you don’t have that much money to deposit upfront, our best CD rates guide may have more suitable options that let you open an account with $1,000 or less.

Discover CD rates review

Discover Bank CD rates are higher than CD rates at many brick-and-mortar banks

Discover has two types of CDs: regular CDs and IRA CDs. IRA CDs are specifically for retirement, and you’ll have to be mindful of annual IRA contribution limits set by the IRS

Discover’s standard CDs and IRA CDs pay similar interest rates and have the same minimum deposit requirements. 

Both types of CDs offer a fixed interest rate, which means your rate will stay the same for the entire term. If you need to withdraw your money before either type of CD reaches the end of its term, you will also have to pay an early withdrawal penalty.

For regular CDs, the bank will charge you some of the interest earned on the CD. If you have an IRA CD, you’ll have to pay penalties from the bank and a 10% additional tax penalty if you withdraw money from an IRA before the age of 59 1/2.

TermAPY3 months1.50% APY6 months2.75% APY9 months2.85% APY1 year4.15% APY18 months4.25% APY2 years4.30% APY30 months4.30% APY3 years4.35% APY4 years4.35% APY5 years4.40% APY7 years4.40% APY10 years4.40% APY

Discover CD – Product Name Only review

Discover might be a solid choice if you’re looking for a bank that offers a variety of CD terms. Usually, banks offer CDs ranging from six months to five years. At Discover, you also have 3-month, 7-year, and 10-year terms.

Discover IRA Certificate of Deposit (CD) – Product Name Only review

Discover IRA CDs are featured in our best IRA CD rates guide. Discover stands out from other banks because it has higher CD rates than the average CD. You’ll also be able to get a 3-month, 7-year, or 10-year term, which may not be offered at other financial institutions. 

Is a Discover CD worth it? 

Discover might be worth considering if you are looking for high CD rates and have Discover CD – Minimum Deposit or more to deposit. 

Discover is also a solid choice if you are close to reaching retirement age and want to invest your money in a low-risk option like an IRA CD. Discover has traditional and Roth IRA CDs, and you’ll be able to choose from several terms. 

If you plan on opening multiple bank accounts at the same financial institution, Discover may be a decent option. Discover has a high-yield savings account and a money market account with high interest rates. It also has a rewards checking account, but this account isn’t currently accepting new applications

You may prefer another financial institution if you’re searching for CDs with low minimum opening deposits or more lenient early withdrawal penalties. 

Discover vs. American Express National Bank 

American Express National Bank and Discover both offer high CD rates for most CD terms. American Express National Bank doesn’t require a minimum opening deposit. At Discover, you’ll need at least Discover CD – Minimum Deposit to open a CD. 

American Express doesn’t offer a 7-year or 10-year term, though. If you’re interested in these specific terms, Discover will be your default option out of the two banks.

Discover vs. Barclays

Discover and Barclays pay similar interest rates on CDs.

Barclays will likely be a better option if you would prefer to get a CD that has a low initial deposit. Barclays lets you open a CD with Barclays Online CD – Minimum Deposit, while Discover CDs require a minimum of Discover CD – Minimum Deposit. You also might lean more toward Barclays if you’re worried about early withdrawal penalties since it’s a bit more lenient than Discover.

If you would like an online bank that offers multiple CD terms, you might favor Discover. Barclays CDs range from one to five years, while Discover has CDs from as short as three months to as long as 10 years. 

Frequently asked questions

What is the minimum opening deposit for a Discover CD?

You’ll need at least Discover CD – Minimum Deposit to open a Discover CD.

What are the early withdrawal penalties for Discover CDs?

If you decide to take out your money from a Discover CD before it reaches the end of its term, the following early withdrawal penalties will apply: 

For CD terms under one year, the penalty is 3 months of simple interest.

For CD terms between one year and less than four years, the penalty is 6 months of simple interest.

For CD terms between four years and less than five years, the penalty is 9 months of simple interest.

For CD terms between five years and less than seven years, the penalty is 18 months of simple interest. 

For CD terms between seven years and 10 years, the penalty is 24 months of simple interest. 

Are Discover CDs FDIC insured?

Yes. Discover CDs are  FDIC insured for up to $250,000 per depositor.

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