Higher Rates for AAA Members at Discover Bank
This deal has been around for a while, but I thought it would be a good reminder for both current Discover Bankcustomers and those considering a Discover Bank account. AAA members can receive a 5 basis-point rate bump on Discover Bank savings account, money market account and CDs. I confirmed this by phone with two Discover Bank customer service representatives. However, there are a few complications.
New Discover Bank Customers
First, AAA doesn't make it easy for all members to see this deal. The Discover Bank CSR said new customers could apply for this deal at www.aaa.com/deposits or by phone. However, AAA appears to only show this Discover deal to those in certain states. I'm in Texas, and it will show a brief page with the message "The service/function is not available in your area". It then brings up the Texas AAA page, and there's no mention of Discover Bank. When I told the Discover Bank CSR about this, she was confused. She was in Phoenix, and the page prompted her to enter her zip code. So it appears AAA automatically determines your state from your IP address.
Even though you may not be able to get to aaa.com/deposits, you should still be able to qualify for the better Discover Bank rates. According to the CSR, you can be a resident of any state. You just need to have your AAA membership number, and they can open the special AAA account by phone. Once you have the account opened, you can access it from the regular Discover Bank website.
Existing Discover Bank Customers
The second complication is for existing Discover Bank customers. Those who have Discover Bank's Premium Savings Account are currently receiving a rate that's 10 basis points above the standard savings account rate (1.30% APY vs. 1.20% APY). The Discover Bank CSR said that existing customers can qualify for the higher rates if they're an AAA member. However, they have to open a new account. So if you currently have the standard Discover Bank savings account that's paying 1.20% APY, you can call and they can open a new AAA savings account that pays 1.25% APY. They can then transfer the money to the new account and close the old account. Unfortunately, this has no benefit if you have the Premium Savings Account which currently has a 1.30% APY.
If you don't have Discover Bank's Premium Savings Account and if you're an AAA member, then it would be worth calling and asking for this new account.
Discover Bank's Premium Savings Account
How to get the Premium Savings Account? Unfortunately, the CSR said this is by invitation only.
In my opinion, this Premium Savings Account seems to have been a way to keep customers happy last year when they were cutting rates. Discover Bank launched their new Account Center last year with a lot of marketing. Many people who opened the savings account during this time appeared to have been moved into this Premium Savings Account. Its rates didn't drop as quickly as the standard savings account rates that are advertised at Discover's website. I'm sure that helped Discover Bank retain more deposits from those customers.
However, the Premium Savings Account rates did fall, and it's now only 10 basis points higher than the standard rate. The problem with having this Premium rate is that it's not as easy to track as the standard rate which is publicly available at Discover's website. To see the rate, you have to log into your account. Discover's Account Center clearly shows the current APY of your account.
Discover Bank CDs
Please refer to my Discover Bank savings account and CD review for more account details. Discover Bank still offers 3.00% APY for a 10-year CD. This is a very long term, but the early withdrawal penalty is better than many other CDs with terms of 7-years or longer. According to Discover's FAQs, the penalty for terms over 5 years is "9 months simple interest on the amount withdrawn".
I have more details on Discover Bank's internet banking features and its ACH transfer service in my Discover Account Center review.
Great article. On a different subject, can you write about Pen Fed?
1- what ever happened to those great 10 yr. cds they were going to offer in 2011?
2- looks like they just slashed their cd rates (?)
So consider if it's worth the hassle, especially if you have to open a new account just to get the deal.
PenFed did go ahead, as promised, in January and open new CDs for certain existing customers who had made advance reservations under a special promotion offered last year. Those had an APY of 5% for the longest available term, which was 10 years under that one time special promotion (which is now long since closed).
I don't believe PenFed ever publicly said what kind of rate they were envisioning for the 10 year CDs that they had been planning to offer subsequently to the general public. And now of course, we don't know if or when those will be offered at all.
Now my 1099 hasn't arrived. I'm on a 6-8 minute hold waiting for an agent. Last week the agent told me to wait till February 15, that my 1099 would probably arrive. But I'm pretty sure that the 1099's were probably still tied to my old address and there is no longer any forwarding.
I think the interest rate is not worth the hassle.