Bad Experience With Discover Bank

greenback | Dec 18, 2022 | 55 posts since 2022

I have been a long time customer with Discover Bank. I was looking for long-term 5 year to 10 years IRA CD and Discover happens to be one of the few or may be the only bank offering 10 years CD. I tried opening the IRA Account online and the application status asked me to call their 1-800 number. I called the Customer Support and spoke with a live person, who asked me security questions to verify me. After successful verification, I requested her to review my application. Upon review, she wanted to ask me additional questions like the Discover CC details, etc. I told her that I do not have it in front of at the moment but I can answer any other questions. I was not sure where was this conversation going after confirming that I have been an existing customer already with good standing. I requested her to complete my application on the phone and help me open the IRA Account. She declined to do it and asked me to go to some local notary office and snail mail the documents to their address. I was like " really ? I am not going to do all that work for sure. Kindly cancel my application...". Still she went ahead and sent me an email with the instructions to my "registered email id" and gave me 60 days time-window to complete the application or it will get cancelled automatically.

Did not expect this from a large reputed online bank like Discover. All that I was looking for was to open a traditional retirement account and transfer funds into it. How unsafe was that for Discover Bank ?

8

GH1 | Dec 18, 2022 | 1,058 posts since 2017

Greenback you are another victim of the almighty chexsystems.

If you’re considering opening a Discover Bank account, you probably want to know, “does Discover use ChexSystems?”

Unfortunately, the answer is, yes, they do.

8

Rickny | Dec 18, 2022 | 1,298 posts since 2017

Keybank put an erroneous address in my Checxsytems file when I tried to open a checking account for a bonus. They then denied me the checking account because of an address that couldn't be verfied.. They wouldn't correct the error so I tried to correct with Checxsytems after I saw the incorrect address in the report. Checxsytems said that Key verified the address. Went to the CFPB who stated what Checksytems said. Sent a letter to the bank president who had someone contact Checksytems.

They still didn't remove the address but they stated it wouldn't show up on an inquiry. Keybank gave me the checking account so I got the $400 bonus.

5

Listedguru | Dec 18, 2022 | 63 posts since 2022

I am thinking about opening a cd acct with Discover and am already a customer with a savings acct there (no credit card). Hopefully it I do decide to open a cd with them it goes smoothly. I had called last week as I had a few questions about their cd's and was told I can open online easy peasy so I guess we'll see. I did see another post here on DA about someone opening a cd online with Discover in about 5 minutes so hopefully that'll be my experience as well.

Regarding Chex systems I wonder why they would even have to use Chex Systems if you already a customer with them?

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JeffinEasternFL | Dec 18, 2022 | 744 posts since 2020

probably yes they will...

3

sams1985 | Dec 18, 2022 | 781 posts since 2022

The process of opening a CD with discover is extremely easy if you already have a savings account open with them.

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greenback | Jan 12, 2023 | 55 posts since 2022

Yes GH1 , received a letter from Discover by mail stating that they denied because they could not verify my information and asked me to contact ChexSystem Inc. I am already having two Savings Accounts and a Credit Card with them. Everything is in good standing with credit score of 800+ . I never had to go to notary in my banking experience of 25 years.

Anyways, I have pulled out all my money from them as I am reading more dreadful experiences from others that their accounts were frozen and they lost access to their money for whatever reasons.

I was a big fan of Discover bank for so many years and had much respect for them for their 24x7 All US- Based customer service. Looks like banking system has changed for worse with time , especially after two major events - 2008 mortgage crisis and pandemic.

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Listedguru | Jan 12, 2023 | 63 posts since 2022

greenback,
Sorry about your bad experience with Discover. I have a savings acct with (for many years) and may open a cd with them but your experience give me pause. I have heard that opening a cd with them is really easy if you already have a savings acct with them which you stated you do. Seems strange that the letter indicated they couldn't verify you information. Do you happen to have either your chex systems report frozen and or your credit report frozen?

3

greenback | Jan 12, 2023 | 55 posts since 2022

Listedguru , I apply and remove freeze on my credit reports are required by the institution before and after my application and did not face any issues in opening accounts. Opened new account (Savings, Checking, Regular CD and IRA CD) around 6 months back successfully.
I registered on ChexSystem only recently after learning about it from other readers on this website. I cannot think of any reason why my application was denied. That's why I moved all my funds out as I cannot deal with unknown risks V/s knowing the issue and fixing it.

1

Listedguru | Jan 12, 2023 | 63 posts since 2022

Very strange indeed. I wonder if it has something to do with it being an IRA CD? Not sure why that would matter though? Or maybe just some sort of fluke thing?

2

Sardonic | Dec 18, 2022 | 34 posts since 2022

I've noticed they offer a 10-yr CD. The 2-yr early withdrawal penalty is harsh, though.

7

kcfield | Dec 19, 2022 | 188 posts since 2012

Greenback: Thank you for your feedback. I had been considering opening a CD with Discover; so I appreciate your sharing your negative experience.

5

greenback | Dec 19, 2022 | 55 posts since 2022

Please note that I was not able to open IRA CD Account with Discover.

I have not tried opening a regular CD with them and it may be easier to open regular CD by moving your money from Savings to CD online. I realized that opening a CD with any CU is better as they have smaller EWP up to 6 months / 180 days mostly , whereas , banks have huge EWP up to 2 years / 24 months. If we take a look at the DA CD Early Withdrawal Penalty Calculator , we begin with negative returns for the first 2 years , starting at as high as -64% (first month). For me , it is simply a big penalty in case we have a need to break the CD in the first 2 years. I considered opening IRA CD with Discover only because we generally don't break IRA CDs and locking it with a decent rate for the longer term made sense to me.

If anybody is planning to open a new account with Discover, one may want to take advantage of the new customer bonus. I am not sure what's the big deal about the ChexSystem and why Discover would use it to disqualify their existing customers in good standing.

I have seen lot of negative reviews for them lately on DA and different websites to a point where others are considering closing their accounts with Discover for poor customer service and lower rates (despite an online bank). Either, they have changed the way they do business or they do not care about their customers anymore since they have A rating with good capitalization.

4

Rickny | Jan 12, 2023 | 1,298 posts since 2017

We did the $150 bonus for opening a savings account with 15 k. No problems opening the account and the bonus was credited promptly as promised. Kept the account open with a couple of dollars.

3

greenback | Jan 12, 2023 | 55 posts since 2022

Congrats Rickny ! We had also opened Discover account for the same bonus few years back and never had an issue. Generally , we close them after earning bonus so that we can qualify again after 1 or 2 years of gap. But we kept this account open as there were more benefits than closing it for those small bonuses. Kept the account open with zero balance.

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Rickny | Jan 12, 2023 | 1,298 posts since 2017

The only time I had an account refused because of Checksytems was with Keybank which I posted about previously. I was able to get a report which listed over 30 inquiries.

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