Discover CDs: Pros, Cons, and Current Rates (2024)

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Discover® Bank (FDIC Insured) has CD rates that are higher ones at many brick-and-mortar banks. You may find CDs from Discover Bank (FDIC Insured) appealing if you want to open an account at a popular online bank and meet the minimum opening requirements for CDs.

Discover CD Rates Today

Discover's standard CDs and IRA CDs pay similar interest rates and have the same minimum deposit requirements. Here are current Discover CD APYs (Annual Percentage Yield):

Discover CDs

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 CDs

Discover IRA CDs have some of the best IRA CD rates. Discover stands out from other banks because it has higher CD rates than the average CD.

Discover CD Pros and Cons

Discover CD Pros

  • Higher interest rates than the average CD
  • Variety of CD terms
  • Interest compounded daily

Discover CD Cons

  • $2,500 minimum opening deposit
  • High early withdrawal penalties

Discover CDs: What You Need to Know

Overview of Discover CDs

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.

Online Banking Experience

You'll have to manage Discover bank accounts using online and mobile banking. To speak with a banker, you'll have to call or use live chat. Customer support is available 24/7, though.

If you prefer banking with an institution with physical branches, brick-and-mortar banks will likely be a better fit.

High Minimum Opening Deposit

All Discover CDs require a minimum opening deposit of $2,500. That's high compared to other banks — generally, you'll need at least $1,000 to open a CD, and other online competitors even let you open a CD with $0 upfront.

Early Withdrawal Penalties

Discover CDs have the following early withdrawal penalties:

  • 3 months of simple interest for a term of less than 1 year
  • 6 months of simple interest for terms between 1 year and less than 4 years
  • 9 months of simple interest for terms between 4 years and less than 5 years
  • 18 months of simple interest for terms between 5 years and less than 7 years
  • 24 months of simple interest for terms between 7 years and 10 years

These penalties are higher than competitor's CDs. Other online banks may also have CDs that do not charge any penalties. The best no-penalty CDs also pay well above average CD rates, so you can find good offerings to fit your preferences.

How Discover CD Earnings are Determined

The interest you'll make on a Discover CD can vary depending on the term chosen and the money deposited. External factors can also determine whether a CD is the best place to keep your money. Economic conditions can determine bank account interest rates, so there are times when CD rates are more competitive savings options or less competitive.

Market Fluctuations

Discover can choose to change bank account interest rates at any time. That said, Discover savings, money market, and CD rates are often impacted by the Federal Reserve's decisions. Rates on these accounts typically go up when the Fed raises rates and drop when the Fed cuts rates. Staying up to date with the next Fed meetings can you help keep track of potential rate fluctuations.

As a reminder, Discover CD rates will stay the same while an account is open. If the bank decides to change rates during the year, you won't be impacted until your CD matures. At CD maturity, experts recommend comparing rates from other banks and terms instead of automatically renewing your CD. That way, you can see if there are more competitive offerings available.

CD Term

Each Discover CD term has a different interest rate. Discover's most competitive CDs are its 6-month, 9-month, 1-year, and 18-month terms. The bank's short-term CDs are paying higher rates than long-term CDs because of the current economic environment.

When you're opening a CD, you want to pay attention to more than which one has the highest interest rate. Experts recommend assigning a specific purpose to your goals, and matching your need with a certain term. For example, if you plan to save money to buy a car in three years, it's worthwhile to open a 3-year CD. There might be shorter terms with higher rates, but the 3-year CD will allow you to earn interest for a longer period of time without worrying about rate fluctuations.

CD Opening Deposit

CDs earn interest because you're keeping money in an account for a specified time. Hence, the bigger your opening deposit, the more interest you'll earn. You want to avoid paying early withdrawal penalties, though, because that can eat away at your earnings. Only deposit what you can keep in your CD for the full term.

Discover CD Alternatives

Discover CD Rates vs. American Express CD Rates

American Express CD rates are lower than most Discover CD rates. American Express National Bank (Member FDIC) doesn't require a minimum opening deposit, though. At Discover, you'll need at least $2,500 to open a CD.

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

American Express National Bank Review

Discover CD Rates vs. Barclays CD Rates

Barclays Bank pays the same or slightly higher interest rates than Discover on most CDs of the same term length.

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 $0, while Discover CDs require a minimum of $2,500. 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 six months to five years, while Discover has CDs from as short as three months to as long as 10 years.

Barclays Bank Review

Should You Consider a Discover CD?

Discover might be a good choice if you are looking for high CD rates and have $2,500 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.

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. There's also better choices if you prefer more lenient early withdrawal penalties.

Why You Should Trust Us: How We Reviewed Discover CDs

We used Business Insider's certificate of deposit methodology to review Discover CDs. We look at interest rates, minimum opening deposits, early withdrawal penalties, CD term variety, ethics, customer support, and the mobile app. We use a scale of 0 to 5 for each category, then average the scores together to calculate the CDs' overall rating.

Discover CD FAQs

Are Discover CD rates competitive?

Discover CD rates are more competitive the average CDs. The bank's CD rates are similar to other popular online banks.

Does Discover offer promotional CD rates?

Discover sometimes has promotional CDs. The bank doesn't currently have any CD specials for new customers, though.

Do Discover CD rates change often?

Discover CD rates are impacted indirectly by changes in the federal funds rate. Rate changes can occur at any time. Once you've opened a CD, though, the interest rate will stay the same throughout its term, and you won't be affected by rate fluctuations until you have to renew a CD.

What is the current 10-year CD rate at Discover Bank?

The 10-year CD rate at Discover Bank (FDIC Insured) is 3.40% APY.

What is the current 1-year Discover CD rate?

The 1-year Discover CD rate is 4.10% APY.

Can I open a Discover CD even if I don't have a Discover credit card?

You don't need to have a Discover credit card to open a Discover CD. You can apply for a Discover CD as a new customer.

Does Discover offer IRA CDs?

Discover has IRA CDs ranging from 3 months to 10 years.

Sophia Acevedo

Banking Editor

Sophia Acevedo is a banking editor at Business Insider. She has spent three years as a personal finance journalist and is an expert across numerous banking topics.ExperienceSophia leads Personal Finance Insider's banking coverage, including reviews, guides, reference articles, and news. She edits and updates articles about banks, checking and savings accounts, CD rates, budgeting, and general saving. Sophia was also a part of Business Insider's 2024 series "My Financial Life," which focused on telling stories that could help people live and spend better.Before joining Business Insider, Sophia worked as a journalist at her college newspaper and was a freelance writer. She has spent seven years writing and editing as a journalist.Sophia was nominated for an Axel Springer Award for Change in 2023 for her coverage of ABLE Accounts, tax-free savings accounts for people with disabilities. She was also a winner of a 2018 California Journalism Awards Campus Contest for her photography.She loves helping people find the best solutions for their unique needs and hopes that more people will find the tools to solve their financial problems. She’s inspired by stories of everyday people adapting to their financial circumstances and overcoming their fears around money.ExpertiseSophia's expertise includes:

  • Bank accounts
  • Savings and CD rate trends
  • Budgeting
  • Saving
  • How banks operate

EducationSophia graduated from California State University Fullerton with a degree in journalism and a minor in political science.Sophia is a member of the National Association of Hispanic Journalists.She is an avid reader across a variety of genres, and she started running in 2021. She ran in the 2024 Los Angeles Marathon.

Evelyn He

Compliance and Operations Associate

Evelyn He is a Compliance and Operations Associate on the Personal Finance team to ensure content accuracy and editorial independence so readers get up-to-date and objective financial advice.The compliance team's mission is to provide readers with fact-checked and current stories so they can make informed financial decisions. The team also works to minimize risk for partners by ensuring language is clear, precise, and fully compliant with regulatory and partner marketing guidelines that align with the editorial team.

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