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Competitive CD Rates and a $50 Bonus at Discover Bank - Nationally Available


Update 6/27/09: New Money market rate tiers: 1.50% APY $2.5K-$5K, 1.55% APY $5K-$10K, 1.65% APY $10K-$25K, 1.75% APY $25K-$50K, 1.85% APY $50K-$100K, 1.95% APY $100K+

Update 6/13/09: New money market rate tiers: 1.50% APY $2.5K-$5K, 1.55% APY $5K-10K, 1.65% APY $10K-$25K, 2.00% APY $25K+

Update 3/15/09: The BestCashCow bonus code has expired. However, the Mainstreet website claims to have its own $50 bonus promo code that's good through 4/15/09.

Discover Bank is offering a $50 bonus for opening a new CD with a minimum deposit of $10,000. The offer is scheduled to last through February 28, 2009. You must enter Offer Code D100739 on the online form in order to qualify.

Unfortunately, Discover Bank's short-term CDs aren't too competitive. However, its CDs with terms of 1 year and longer are fairly competitive. The rates as listed at Discover's rate table as of 2/12/09 range from 2.75% APY for 1 year to 4.00% APY for 7 years. Adding $50 to the 1-year CD with a $10K investment would result in an effective APY of about 3.25%. Larger deposits and longer terms would diminish the effect of the bonus.

AAA members who live in certain areas can receive a 5 basis-point rate bump on all Discover CDs. I doubt the $50 bonus would apply for these cases, but the AAA bonus may be better for larger deposits and longer terms. To find the AAA rates at Discover's website, start at AAA's financial services page and enter your zip code. You should then see a Discover Bank link on the right. Note, this Discover Bank AAA accounts don't seem to be available for all zip codes.

The details about Discover's CDs are listed at their CD overview page and the CD FAQs. Some of the details include:
  • Fund CD with an ACH electronic funds transfer or check
  • Early withdrawal penalty of 6 months interest on amount withdrawan for terms of 1 to 5 years
  • Grace period is 9 calendar days after the CD matures
  • Same rates available in IRAs
Discover Bank's money market account has been fairly competitive. As the rates have dropped, the difference in the rate tiers have increased. The rates now range from 2.05% APY for a $2,500 minimum balance to 2.40% APY for a $50,000 minimum balance (as of 2/12/09). There's a $10 monthly fee if the balance falls below $2,500. The AAA version has a yield 5 basis points higher, plus it only requires a minimum balance of $1,500 to avoid the fees.

In a previous post, a reader mentioned in the comments about his problems with Discover Bank's customer service. In his opinion the customer service "is often unavailable, and unreliable at best." If you've been a Discover Bank customer, your comments are appreciated.

For those who are looking for a healthy bank, Discover Bank may be a good option. It has some solid ratings for safety and soundness: 4 stars (excellent) at BauerFinancial and 5 stars (superior) at Bankrate.com. Both ratings are based on 9/30/08 financial data. Discover Bank is a member FDIC (Certificate # 5649).
Related Pages: CD rates, IRA rates

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Previous Comments
  |     |   Comment #1
is the bonus good for opening a money market instead of a cd ?
Jersey Guy
  |     |   Comment #2
I tried to open a Discover CD last November when they were offering an APY of 5.21%. I received a AAA application by mail for the extra 5 basis points and filled out the application and mailed it in with a CERTIFIED CHECK. Big mistake. The bank claimed they never recieved my application and it was a nightmare trying to stop payment on a certified check. I can't ever remember losing a check "in the mail" in my life. I suspect incompetence at Discover Bank as many people have commented on before (on other blogs as well).

Open an account if you choose, but NEVER send a certified check by mail and certainly not to Discover Bank. Certified checks are very difficult to stop payment on!
  |     |   Comment #3
Having had Discover CD's in the past, I would agree that phone customer service as well as website responsiveness is lax & unreliable at best.
I would say the operation is unprofessional, and a headache best avoided.
  |     |   Comment #4
But, you gotta love Discover Bank and Discover credit cards; their CSR's are in the USA!

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