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Discover Bank Boosts Long-Term CD Rates


Availability: Nationwide (internet bank)

Discover Bank spread a little early Christmas cheer on Wednesday by raising rates on its 5-year CD (2.20% APY) and 7-year CD (2.25% APY). These are the highest rates for both CDs in more than four years.

The minimum opening deposit for any of Discover Bank’s CDs is $2.5K, with no balance cap. Both CDs are also available as IRAs (Traditional and Roth) earning the same APYs and with the same funding requirements.

3.75%$2.5k-Discover™5 Year CD
3.75%$2.5k-Discover™7 Year CD
3.75%$2.5k-Discover™5 Year IRA (Traditional, Roth)
3.75%$2.5k-Discover™7 Year IRA (Traditional, Roth)
Rates as of April 16, 2024.

As stated in Discover Banks’s Certificate of Deposit Account Guide, the Early Withdrawal Penalty (EWP) reads as follows:

5 years: 18 months simple interest on principal amount withdrawn
7+ years: 24 months simple interest on principal amount withdrawn

DA readers may recall that in March 2013 and February 2014, Discover Bank increased its EWPs, making the option of an early closure much less attractive. The history of these increases is as follows:


Headquartered in Greenwood, Delaware, Discover Bank is an internet bank with no brick-and-mortar branches. To qualify to open an account of any kind with Discover Bank,

each Account owner must be a U.S. citizen or other U.S. person, be at least 18 years old, have a valid Taxpayer Identification Number, have a valid physical U.S. address and provide an electronic consent and signature.

Opening a CD must done online. Funding the CD can be done by 1) online transfer from an eligible Discover Bank Account or an external bank account, 2) phone transfers (available for initial funding only), or 3) by mail.

Bank Overview

Discover Bank of Commerce (FDIC Certificate # 5649) has an overall health grade of "A" at DepositAccounts.com, with a Texas ratio of 5.56% (excellent) based on September 30, 2015 data. In the past year, Discover Bank has increased its total deposits by $3.2 Billion, an excellent annual growth rate of 7.24%. Please refer to our financial overview of Discover Bank for more details.

As one of the largest financial services firm in the country, Discover Bank traces its roots back to the Greenwood Trust Company, which was established in 1911. Discover Bank came into being following the purchase of the Greenwood Trust Company in 2000. Today, Discover Bank has assets in excess of $84 Billion and more than 415,000 ATMs spread across the United States.

How the CDs Compare

When compared to the 114 similar length-of-term CDs tracked by DepositAccounts.com available nationally, Discover Bank’s 5-Year CD APY currently ranks in the top five.

When compared to the 11 similar length-of-term CDs tracked by DepositAccounts.com available nationally, Discover Bank’s 5-Year CD APY currently ranks first.

The above rates are accurate as of 12/26/2015.

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

  |     |   Comment #1
I don't think a 7 year 2.25% cd is a great deal.  I would probably go with a 5 or 10 year TIPS as the real rate has been inching up with Yellen's hike.  Actually, a 30 year TIPS is giving a real rate of 1.2% with inflation running 1%, but you don't pay state tax and get the inflation protection.

Who knows, the environment of easy interest on our hard earned wealth just doesn't exist right now.
  |     |   Comment #5
Don't "you" have to recognize as income (for fed taxes) the interest component each year w/o having the money?
  |     |   Comment #2
As I have posted before, be very wary of the early withdrawal penalties.  They are high, and the bank does not give you much of a grace period.  I had to complain to the Consumer Finance Protection Agency to get penalties assessed when the bank "lost my paperwork" - the penalties were in excess of $1000.  Again, just make sure you have all your ducks in a row before you try to withdraw your money early or transfer funds to a different institution.
  |     |   Comment #3
We should probably call the Consumer Finance Protection Agency about Valor Credit Union.  We can't anymore to their 7 year cd.  I wonder if Ken will write an article about that.  This is the second time this credit union has attempted to pull this stunt.
  |     |   Comment #4
Anonymous, you're missing all the fun.  The party is happening here.   Come on over - we can use all the help we can get. 
  |     |   Comment #6
Discover Bank has one branch, and it's located at their main site: 502 E. Market Street, Greenwood, DE 19950
  |     |   Comment #7
Im not willing to lock up my money for 7 years for just 2.25%.

I own SO shares and they yield about 4.7%. And I have a closed end preferred stock fund that Ive had for I don't know, 2 and a half years now and its averaged just under 7% with dividends reinvested.

(Based on 3 buys over about a 2 month period)
  |     |   Comment #8
Speaking of Discover, do they ever offer any kind of bonuses for opening a savings account ?

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