Dedicated to Deposits: Deals, Data, and Discussion
DETAILSINSTITUTIONAPYMINMAXPRODUCT
Discover Bank2.25%$2,500-10 Year CD
Discover Bank2.25%$2,500-10 Year IRA (Traditional,Roth)
Discover Bank2.05%$2,500-7 Year CD
Discover Bank2.05%$2,500-7 Year IRA (Traditional,Roth)
Accounts mentioned in this post. Rates as of April 17, 2014

Discover Bank's Competitive Long-Term CD Rates

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Discover Bank

One of the few banks still offering a 2% CD is Discover Bank. Unfortunately, this requires a long term. Discover Bank's 7-year CD has a 2.00% APY and its 10-year CD has a 2.10% APY. These rates are accurate as of 9/27/2012.

Minimum deposit is $2,500, and these CDs are available in an IRA. Early withdrawal penalty for terms over 5 years is equal to 9 months simple interest on the amount withdrawn. You can see how this penalty would reduce the effective rate if the CD is closed early in my long-term CD comparison post.

Discover Bank used to offer an extra 5 basis points to AAA members. This changed in July. Only a few CDs now get higher rates. In addition, there's no premium rate for the savings and money market accounts. Currently, the only 3 CDs that have rate premiums are the 1-year, 2-year and 5-year CDs. These rates are fairly competitive (1.05% APY 1-year, 1.20% APY 2-year and 1.80% APY 5-year as of 9/27/2012). You can see the latest AAA Discover Bank rates at www.aaa.com/deposits. Note, this page doesn't show for some states. I was told last year that AAA members from any state can qualify for these higher rates. If you can't apply online, you can apply by phone. I have more details in this post.

AAA isn't the only association that has an agreement with Discover Bank for special rates. American Association of Individual Investors (AAII) still offers its members an extra 5 basis points on all CDs, savings and money market accounts. These rates are listed at this Discover Bank/AAII page. AAII basic membership costs $29.

Discover Bank is one of the largest internet banks. It has over $71 billion in assets and over $41 billion in deposits. Its overall health score at DepositAccounts.com is 5 stars (out of 5) with a Texas ratio of 7.08% (excellent) based on June 2012 data. Please refer to our financial overview of Discover Bank for more details. The bank has been a FDIC member since 1934 (FDIC Certificate # 5649).

How These CD Rates Compare

There are not many other options if you want a 2% CD. The only other large bank that I know of with a 2% CD is BBVA Compass which still has a special 2% 5-year CD. However, this is only available in a few states where BBVA Compass has branches.

For CDs available nationwide, the only other option is an all-access credit union. Yesterday, I reviewed Air Force Federal Credit Union which has a 2.25% APY 7-year CD. Pentagon Federal Credit Union has a 2.02% APY 7-year CD. Both of these credit unions have larger early withdrawal penalties than Discover Bank. There are four all-access credit unions that offer 2% 5-year CDs. The best deal is currently at Eli Lilly Credit Union.

The above rates are accurate as of 9/27/2012.

Searching for the Best CD Rates

To search for the best nationwide CD rates and the best CD rates in your state, please refer to the CD rates section of DepositAccounts.com.

  Tags: Discover Bank, CD rates

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Comments
8 comments.
Comment #1 by larkin posted on
larkin
If you open via phone, please make sure that you recieve, sign and return your signature card.  Then wait a week and confirm that it got there.  I had a issue last year where they never received my signature card and I never received their follow-up reminders.  Discover and the USPS apparently do not go well together.

The upside to opening by phone is the rate locks immediately.  If you open on-line, you can do so with a electronic signature and avoid the snail mail hassle but the rate doesn't lock until the funds arrive.

7
Comment #10 by cactus posted on
cactus
#1 Thanks for the warning. This may have changed, but I was able to fax back a copy of the signature letter.

1
Comment #2 by RICKNY (anonymous) posted on
RICKNY
Locking up at 2.05% for 10 years is a long time for such a small rate.  I feel for our "seasoned" savers who need to survive on yeild.  I'm younger and investing in Muni's that are paying approx 3.5% tax free for approx.  10 years.  I would rather get a 1.25% CD at CIT (I believe it's 2 or 3 years) than lock up funds for 7 or 10 years at 2.00%.  I believe you can add to the CIT Achiver CD's.

3
Comment #4 by RICKNY (anonymous) posted on
RICKNY
You call this a "deal"?

2
Comment #9 by cactus posted on
cactus
#4 They have co-marketing deals with AAA, AAIE, and "BJ's Wholesale" -- and probably other organizations and companies. All with slightly different rates on different products.

1
Comment #5 by Anonymous posted on
Anonymous
AAA club used to offer a bonus interest rate on Discover CD's but it appears that even that small incentive is no longer offered.  Locking up money at 2% for 10 years is crazy.

3
Comment #6 by Anonymous posted on
Anonymous
Lockin up money for any period of time  at  2% before taxes   when inflation is running at 4-5% per year............. is crazy. 

5
Comment #7 by Anonymous posted on
Anonymous
You're correct.  And the bank/cu's are really arrogant about it.  But what other choices do we have unless we're willing to take on risk?  I heard bernanke's zero interest is creating less spending and more saving.

5
Comment #8 by RICKNY (anonymous) posted on
RICKNY
I would still stay shorter than 5 years.  No 7 or 10 at 2%. 

2