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I Tried the ‘Joy’ App and It Totally Changed the Way I Think About Spending

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

What makes you happy? In the final quarter of 2017, amid growing interest in a growing field of a study called behavioral economics, financial services company Happy Money — formerly known as Payoff — released the Joy app to help you answer that question. At least, when it comes to your spending decisions.

What is Joy?

Joy is a personal finance app that uses psychology and financial behavior to help change the way you think about, spend and save money. The Costa Mesa, Calif.-based company behind Joy claims it will help “drive awareness of how spending is connected to happiness, and to encourage people to build savings.” In other words, it may help you find the joy in handling your finances.

Joy has joined the ranks of many, many other fintech apps designed to help you keep track of your money. The app was released by Happy Money in November 2017 as one of its three core products: Joy (the app), Payoff (the loan) and soon-to-be-released Happy Money Score (a Happy Money rating).

“I think it really resonates for people. People care about happiness and want to understand how to use their money to be more happy,” said Elizabeth Dunn, Ph.D., Joy’s scientific advisor and co-author of “Happy Money: The Science of Smarter Spending.”

In the book, she and researcher Michael Norton lay out the following five research-based principles on how to find financial happiness:

  1. Buy experiences — People gain more happiness from buying experiences than material things.
  2. Invest in others — People seem to derive more happiness on average when they use their money to benefit others, rather than themselves.
  3. Buy now, consume later — People derive happiness when they pay in advance for something they will consume later because the brain feels like it’s “free.”
  4. Make it a treat — People gain more happiness when they spend money on a “treat.”
  5. Buy time — People derive happiness when they buy time. For example, buying their way out of their a task, like cleaning the bathroom.

After finding out how handling your finances affects your well-being, Happy Money’s team of psychologists, data scientists, neuroscientists, tech experts and financial professionals came together to create the Joy App to give people a tool to track how their spending makes them feel.

Joy has two core functions:

  1. Rate your spending — After you connect your bank accounts and credit cards, the app has you rate each transaction you’ve made with a happy face or sad face.
  2. Save money with Joy Savings — Each day you open the app, you’ll be reminded to save an amount of money that Joy’s algorithm has found “safe” for you to save — called a Daily Save — to an FDIC-insured Joy Savings account.

Rating your purchases is intended to help you better recognize what kinds of purchases bring you happiness, so you can focus on making more of those and fewer purchases you’d rate with a sad face. Over time, theoretically, you’d develop a habit of making more spending decisions that make you happy as a result.

The free savings account is supposed to help you make a habit out of saving money. The app prompts you daily to save money, but doesn’t save the money for you automatically.

Dunn says that’s because you create a different association with saving money when something happens automatically than when you are involved in making it happen.

“People figure out what they themselves are like in part by observing their own behavior,” said Dunn. “It seems very plausible to me that if you engage in this habit, you will start to see yourself as the kind of person who cares about and is capable of saving money.”

The MagnifyMoney Joy review

I’m personally intrigued by ideas about how human psychology tends to influence our financial decisions.

I’m also part of the camp that isn’t always thrilled to glance back at their recent spending decisions. You know the feeling: you make a few ‘guilty’ purchases then just avoid checking up on your checking account balance or reviewing your recent transactions (which one should do because it’s sort of key to properly managing one’s finances).

That being said, I was curious about what many reading this are probably wondering now: How exactly will downloading yet another app to track my spending habits make me any happier about my spending? Or, at the very least, motivated enough to keep tracking them after a spending binge.

So, I decided to try out Joy for myself to see if the app would do what it claims.
The following is my account of how the Joy app — featuring very bright colors and a chatty robot — forced me to get face-to-face with my spending habits and and decide if they (really) made me “happy,” or, um … not so happy. Unfortunately, the app didn’t really help me save much money, but we’ll get to that later on.

What I liked about Joy:

It forces you to review your spending
I liked that the app asked me to rate whether or not my recent transactions were “happy” or “sad” spends each time I opened it up. After a few days of doing this, it started to affect my real-time spending decisions. Since I knew I’d have to decide how I felt about my spending decisions afterward, the thought began to cross my mind before I swiped my cards. For example, since I know I made a “sad” spend last time I ordered food at a restaurant I knew I couldn’t finish and ultimately wasted, I thought about my ability to actually eat the food I planned to order rather than what my tummy was saying when placing my brunch order.

Set reminders to review your spends and check your Joy Savings
I thought it was nice to be able to set a reminder prompting me at the same time each day to go over my spends and make a daily save. I set a reminder for a time at the end of the day when I’m usually relaxing, so I’d have a few minutes to think about how each of my transactions made me feel.

Since the daily safe-to-save amount can differ from day to day and isn’t automatically transferred, it was helpful for me to set a reminder to check on my Joy Savings account and decide whether or not to transfer the suggested amount.

See changes over time
A cool feature of the app is its ability to show you how you’ve been doing over time. I just had to ask my money coach a question to see details like how much I’ve spent this month versus last month, how my happy spends compare with sad spends or how I’m doing with my savings habits compared with other people with my money personality, among other stats.

Savings aren’t automatic
Because the savings aren’t automatic, there was no danger of using funds I thought I had in my checking account and accidentally overdrafting. I only keep a low balance in my main checking account and make transfers if I need to, so it’s especially important to me to avoid overdraft and NSF fees. If you keep a low balance and use an app that automatically transfers money for you, you may be thrown off if you don’t stay on top of what’s going in and out of your account.

Saving out of sight
The Joy Savings account is separate from my checking and saving accounts, so I don’t see how much money is in the account when I check my bank balances. To me, it’s like that money doesn’t even exist, so it’s a nice surprise when I do see the balance in my Joy Savings account. Because the daily save amount is a small amount that’s “safe to save,” I don’t miss the money in my main checking account at all — I don’t even notice the money’s gone.

Saving does feel good
It feels great to hit “save” each time I check the app. I have all of my other saving automated, so I don’t have to take action to save the money and I almost never see the funds. By making saving a daily action, I feel like the kind of person who actively saves money, instead of the kind of person who has to try really, really hard not to spend — or even look at — her savings.

I’m saving more money
I thought I was already saving as much as I reasonably could since I have a budget and make my saving automatic. So I didn’t expect the algorithm to calculate much of anything. I keep less than $100 in a main spending account. So it often calculated daily saves of $2 or less. Having to save money from my spending account was, for me, just extra saving, but it showed me I could actually collect a little bit more if I tried.

What I didn’t like about Joy:

Unclear how to utilize my ‘money personality’
I enjoyed taking the personality quiz, but outside of knowing I was a “free spirit” and setting me up with an AI robot to chat with, I don’t get much of any sense about how my money personality applied to my use of the app’s spending and saving features. For example, my designated personality type didn’t seem to affect the amount of money the algorithm calculated for me to save or how my happy and sad spends were split up, so while it’s nice to know, I didn’t see much opportunity to apply the knowledge within the app.

The app is only available on iOS
As of this writing, the Joy app is only available on iOS, so only those with Apple products are able to download and use the app. That was fine news for me since I have an iPhone, but anyone who doesn’t have an iPhone or iPad isn’t able to try out Joy.

My experience with customer service
I had a negative experience with customer service when I first tried to use Joy Savings. I misunderstood the instructions and accidentally linked the wrong account to my Joy Savings account. I connected it with an emergency savings account instead of my main checking account. I thought I’d easily be able to change the linked account within the app. I was wrong.

I searched the app and I asked my money coach, but didn’t see anything related to unlinking the account. So I went online to search for a solution and found out I’d have to email [email protected] for help. I sent an email asking for assistance on Dec. 19 and got a reply from a customer service representative saying they’d reach out to an engineer and let me know when they were ready to re-link my new account. So, I waited for an email.

When I didn’t receive any correspondence by Dec. 26, I emailed the same representative back. Nothing. I emailed again, including the original [email protected], asking, “Any word yet on fixing my Joy Savings account?” Again, I didn’t get a reply back. I sent another email nearly a month after I had sent the initial request. At this point, the wrong account was still linked to my Joy Savings account and I still had no way of fixing the issue on my own.

By mid-January, I was in the middle of writing this review, so I was able to enlist the help of the company’s press representatives in resolving my Joy Savings mistake. When I informed them of the difficulty I was having with customer service, they acted promptly and were able to unlink the wrong account within a couple of hours. I linked the correct account and finally got to start making a daily save on Jan. 19 … a full month after I initially asked for help.

Ironically, I finally got an email back from the service representative who was supposed to help me, whom I emailed four times by now — on Jan. 22. He said my conversation had been lost in the queue. I sent a final email letting the representative know my issue had already been addressed, but thanking him for working on it. I hope he gets it.

Cannot change Joy Savings account in app
As of this writing, you are unable to change the account linked to your Joy Savings from within the app. A company spokesperson said the Joy app is still in its soft launch stage, and the company will soon introduce new features like having more control over connected accounts and settings.

Who the App is Best For

If you are new to personal finance, it may benefit you to use Joy to get a sense of your spending habits. The Joy app seems to be best for those who:

  • Aren’t into budgeting
  • Want to develop a habit of reviewing their transactions
  • Want to be more conscious of their spending habits and/or
  • Have a difficult time finding money to save in their budget

How to use the Joy app:

Create your account

Before you can use Joy, you’ll need to create an account using your phone number. The app will send a specific code to your phone, which you’ll need to enter to start using Joy. You should see a gif and a message welcoming you to Joy pop up on the screen for a few seconds.

Sign up for Joy.
When the gif disappears, you’ll begin a text-bubble chat with Joy. You’ll be confronted with a questionnaire designed as a text-bubble conversation.

You’ll then be asked for basic sign-up information like your name, annual income and whether you rent or own where you live. You’ll be able to respond to most of the questions with pre-made responses, almost like a multiple-choice test.

Get your money personality

Next, Joy will tell you about yourself. Joy will ask you five questions and use the responses you give to help you discover your “money personality.” There are a 12 different money personalities in total. Chris Courtney, Ph.D, Happy Money’s senior director of science, says your personality is directly responsible for how you spend your money. You can continue on to the questions, or, if you’re curious, ask Joy why it needs to know that.

Knowing your money personality upfront is also supposed to help personalize your experience with the app. Joy’s creators claim this helps you feel less judgmental toward the process compared with other existing budgeting apps that employ a cookie-cutter approach to their users’ finances.

“By taking the time to get to know each person and giving them some information and context regarding their own personality, it kind of expresses to someone we don’t expect everyone to be the same,” said Dunn.

Joy says I’m a free spirit with my finances. In my opinion, that’s fairly accurate. I’m almost never on time (just ask my editor) and I do very much hate categorizing my budget. I don’t last long with budgeting apps that make you have spending categories because my habits don’t always fall into easy-to-estimate budgeting groups. I’d much rather pay my bills and allocate my savings to end up with chunk of money I know is safe to spend, which is why I already have my bills and saving automated. Well done, science.

Get your money coach

Having your money personality also helps Joy set you up with an artificially intelligent robot dubbed your personalized money coach. You’ll meet your money coach next. There are four coaches in total — Dash, Gem, Ava and Atom. My coach is Gem.

Your money coach’s interaction with you depends heavily on your money personality. Courtney says to think of the coach like a personal trainer at a gym.

“Some people will respond well to an intense and challenging approach, while others will want small goals with a lot of positive affirmation,” said Courtney.

Everything about the way your coach interacts with you — presenting goals, celebrating victories, encouraging you to do better, punctuation, emojis, and slang — stems from your money personality. It’s supposed to make you feel more comfortable when dealing with a financial advisor, as opposed to being judged.

“People feel happier when they are with others who are similar to themselves,” said Dunn. “It creates a sense of well-being and comfort when you are interacting with people who speak like you do.”

You can start a chat with your coach whenever you want. The topics and responses are somewhat limited, but give you all the information you need to use the app. Your coach can give you stats about how you are doing with your spending or saving, for example, or how others, such as those with your money personality, are doing.

 

Add your credit cards and bank accounts

Of course, you’ll need to connect your bank accounts and credit cards to Joy so it can track your finances. You’ll see the option to link spending accounts on the spending side of the Joy app. You can add bank accounts and your credit cards. The app will use the linked accounts to pull up transactions for you to rate.

I was able to link all of my accounts easily and the app was able to bring up my recent transactions within a few minutes.

Review your recent spends.

Once your accounts are all set up, you can begin rating your spends. You’ll be asked to rate each of your recent transactions with either a happy, smiling face or a sad, frowning face in response to “how do you feel about your spends?” You’ll rate transactions in batches of ten, then, if there are more to be rated, you can continue until you’re through with your recent transactions.

Don’t overthink this part. I did, so I’m warning you. Take the $13 I spent at Zaxby’s fast-food restaurant the other day, for example. I felt conflicted when I had to rate the transaction because I thought, “Um … both?”

I was visiting my hometown in Georgia, and I really, really missed eating Zaxby’s since I live in New York now and there is no Zaxby’s up here. The food tasted magical. But, I’ve become a bit more concerned with my health since I was in college, eating Zaxby’s every week so I did sort of feel bad (physically and emotionally) after eating fast food.

So, what would I put? A happy face because the Wings-N-Things meal I’d ordered was tasty and satisfying? Or a sad face because I spent money on something that wasn’t a very healthy eating or spending choice (since my mom had “free” food made for me at home). Honestly, I didn’t need to spend the money. But, it’d been nearly two full years since I’d had Zaxby’s! I couldn’t decide. I was frustrated there weren’t more faces. Maybe a [shrug] emoji?

Dunn says the app only gives you two choices on purpose. It makes it easier for you, with everything going on in your daily life, to extract useful information.

“If every time you spent $15 you had to reflect on 17 different aspects of the emotional experience, you wouldn’t do it,” said Dunn. “This is kind of asking people to go, ‘okay what’s your overall ledger?’ You can suck up a lot of the variability in a wide range of emotions with the happy face and sad face.”

I eventually rated the spend “happy.” But, now that I know spending money on food that’s not great for my health makes me feel bad, I avoid it like the plague.

Set up your Joy Savings Account.

When your accounts are all linked, you can set up your Joy Savings account. You’ll chat with your coach to get an explanation of how Joy Savings works.

First, you’ll link an account to fund your savings account. The algorithm will use to calculate an amount you’re able to save each day, so it should be the checking account you use for most of your spending.

Each day you open Joy Savings, you should see your “Daily Save” and the option to go ahead and transfer the money to your Joy Savings account, or choose to pass on saving today. Whenever you decide you want your money, you can request to transfer the amount you’d like from your Joy Savings account to your checking account. The deposit should clear within 1 to 3 business days.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at [email protected]

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Reviews

An In-Depth Review of Discover’s Banking Products

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.


Discover Online Savings account

A completely fee-free online savings account, with no minimum balance requirements, and competitive interest rates.

APY

Minimum Balance Amount

2.00%

$0

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None as long you use an ATM within Discover’s network.
  • ATM fee refund: None.
  • Overdraft fee: None.

There is no minimum balance to open a Discover Online Savings account, nor do they charge any monthly maintenance fees. While account holders do not have the ability to withdraw money from their savings account via an ATM, they are able to access and manage their savings account via Discover’s online banking and mobile app. The online banking and mobile app lets users deposit and transfer money to both Discover Bank and non-Discover bank accounts. This account doesn’t come with any fees. Even if you exceed the Federal Reserve’s Regulation D limitation of six withdrawals or transfers in one calendar month, Discover will not charge an excessive withdrawal fee. If you exceed six certain transactions more than once, your account may be closed. Discover will only do this if you exceed the limit “more than on an occasional basis”. Be sure to read the Deposit Account Agreement for specifics around this limit.

Currently, you can earn a competitive interest rate of 2.00% APY on a Discover Online Savings account. This is compounded daily and deposited into your savings account every month. As soon as you deposit money in your account, you’ll begin earning interest.

This is a solid savings account for anyone who already has a checking account with Discover, has a substantial amount of savings, or wants to earn a competitive interest rate on their savings account. It stands out for being fee-free and requiring no minimum balance or deposit, but falls short when compared with all the current interest rates out there.

There are no eligibility requirements to open a Discover Online Savings account since they do not require an initial minimum deposit or any minimum balance. There is currently a bonus being offered if you apply for the savings account for the very first time by 09/09/19. If you meet qualifications by 09/23/19, you could receive the $150 or $200 bonus. Click the button below for full details.

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How Discover Bank’s savings account compares

Compared with other online savings accounts, Discover Bank does not have the best offerings. That’s not to say it’s bad. Next to what major banks are currently offering, this account is a major win. However, with a little research, you can find better interest rates out there that also don’t have minimum balance requirements.

To see what other rates and offers are out there that fit your savings goals check out our Best Online Savings Account Guide.

Discover Bank’s CD Rates

A minimum deposit of $2,500 gives you competitive CD rates among online banks, but higher rates can be found.

CD term

Annual Percentage Yield (APY)

3 months

0.35%

6 months

0.65%

9 months

0.70%

12 months

2.40%

18 months

2.40%

24 months

2.45%

30 months

2.45%

3 years

2.45%

4 years

2.45%

5 years

2.50%

7 years

2.60%

10 years

2.70%

  • Minimum opening deposit: $2,500
  • Early withdrawal penalty:
    • For CDs that are less than one year, the penalty will be worth 3 months of simple interest.
    • For 1-3 year CDs, the penalty is 6 months of simple interest.
    • For a 4 year CD, the penalty is 9 months of simple interest.
    • For a 5 year CD, the penalty is 18 months of simple interest.
    • For 7-10 year CDs, the penalty is 24 months of simple interest.

Discover Bank offers certificates of deposits with terms ranging from three months to 10 years. Interest is compounded daily and is deposited every month. As with most CD rates, the longer the term of the CD, the higher the rate you will receive. To make sure you lock in the highest possible rate for your CD, make sure you fund your account within ten days of application.

There are early withdrawal penalties for taking your money out before the end of the term. The penalty amount varies depending on how far you are into your CDs term.

While there are penalties for withdrawing your money early, you do have the option to withdraw any interest earned on your CD to a Discover bank account without penalty. This money can also be left in your CD to compound throughout the life of your CD. Account holders receive notice of CD maturity 30 days prior to the end of the term. Once a term has ended, account holders have a 9-day grace period to make a change to their CD before incurring penalties. If no action is taken, Discover CDs will automatically renew at the same rate and term.

You can open a Discover CD online or by phone. The only eligibility requirements come in the form the $2,500 minimum deposit, which can be paid via phone, check or an online transfer from your bank. Discover provides the option of opening your CD in the form of a Trust, Guardian, Estate or Custodial account, but in order to do so, you must call one of their Banking Specialists.

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How Discover Bank’s CD rates compare

Overall, Discover Bank CD rates are competitive. They certainly beat out most of the major banks by far when it comes to APY. However, if you do some digging, there are better rates out there for CDs, both in terms of minimum deposit and interest rate earned.

Discover’s minimum deposit of $2,500 is the biggest downside to this product. While it’s not common for banks to offer no-fee withdrawals on CDs, there are some out there. To find the most competitive CD rates on the market right now, check out our Best CD Rates page.

Discover CashBack Debit account

Discover CashBack Debit offers no monthly fees and pays decent cashback rewards.
  • Monthly account maintenance fee: None.
  • ATM fee: None as long as the ATM is within Discover’s network.
  • ATM fee refund: None.
  • Overdraft fee: None.

The Discover CashBack Debit account is appealing because it doesn’t carry any fees — that means no monthly maintenance fee, no minimum balance requirements and no fees for check ordering or debit card replacement.

They offer free online and mobile banking options like bill-pay, wire transfers and account management.

One of the account’s main selling points is the cashback reward, which pays 1.00% on debit card transactions up to $3,000 on purchases each month. In other words, if you spend up to $3,000 in a month you receive $30 cash back. This 1.00% return is not an interest rate, but rather a cashback reward. There are no qualifications to earn the cashback rewards — when you spend with your debit card, you’re earning rewards. These rewards can be redeemed as a credit to your checking account or transferred to a Discover CashBack Bonus card account.

Discover recently partnered with AllPoint and MoneyPass to increase their in-network ATM locations by 60,000+. While Discover does not charge ATM fees for going out-of-network, they do not reimburse ATM fees incurred by third-party ATMs.

Since Discover Bank is considered an online bank, you must open your account online via their website or by phone. There are no minimum deposit requirements, nor do they require account holders to keep a minimum balance. Once you open your account, you’ll receive your debit card within 10 business days. Discover offers free checks for their CashBack Debit account, although you must request them.

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How Discover Bank’s checking account compares

The Discover CashBack Debit account stacks up against other banks when it comes to offering a no-fee checking account. While they do boast a large ATM network, in part to their partnerships, they still do not reimburse out-of-network ATM fees. When it comes to rewards, their cashback reward is decent.

There are better cashback rewards programs out there, as well as, accounts that don’t require you to spend money to make money. If you spend a significant amount money via your debit card every month, this rewards program might make sense. If not, there are other banks that currently offer better rates on checking accounts for less effort on your end.

Discover Bank’s Money Market Account

Good withdrawal options, but with a high minimum balance requirement and interest rates that don’t stack up.

APY

Minimum Balance Amount

1.85%

Less than $100,000

1.90%

Greater than $100,000

  • Minimum opening deposit: $2,500
  • Monthly account maintenance fee: None
  • ATM fee: None, but only if you use an ATM within Discover Bank’s network.
  • ATM fee refund: None.
  • Overdraft fee: None.

Opening a money market account with Discover Bank requires a minimum initial deposit of $2,500. They don’t even beat out Discover’s saving account rates.

There are a few account features worth noting, starting with the withdrawal options. Unlike the Discover Online Savings account, account holders will receive checks and a free debit card. Your debit card can be used to withdraw money via ATMs and at stores.

Discover Bank does not charge ATM fees, however if you use an out-of-network ATM they will not reimburse the fee. It’s important to note, that your money market account is subject to the same Federal Reserve regulations limiting transfer and withdrawals to six per month. If you exceed the six transfers or withdrawals more than on an occasional basis, Discover might just close your account. Luckily, this does not apply to withdrawals from ATMs or via official check that is mailed to you. Discover Money Market accounts also give you the ability to sign up for online bill pay, as well as, overdraft protection.

The only eligibility requirements to open a Discover Money Market account is an initial minimum deposit of $2,500. You can open an account either online or by calling one of their Banking Specialists. To fund your account, you have the option of an online transfer, direct deposit or check, which can be mailed or deposited via Discover Bank’s Mobile Check Deposit app.

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How Discover Bank’s money market account compares

Looking at the overall market offerings, Discover Bank Money Market accounts do not stack up. Their competitive account features like a large ATM network, free checks and a debit card are nice, but their rates do not compete.

You can find other banks offering lower deposit requirements, as well as better rates. To see how this account compares, check out MagnifyMoney’s Best Money Market Rates guide.

Discover IRA CD rates

Competitive rates with a higher-than-average minimum deposit for both traditional and Roth options.

Term

APY

3 Months

0.35%

6 Months

0.65%

9 Months

0.70%

12 Months

2.40%

18 Months

2.40%

24 Months

2.45%

30 Months

2.45%

3 Years

2.45%

4 Years

2.45%

5 Years

2.50%

7 Years

2.60%

10 Years

2.70%

  • Minimum opening deposit: $2,500
  • Early withdrawal penalty:
    • For CDs that are less than one year, the penalty will be worth 3 months of simple interest.
    • For 1-3 year CDs, the penalty is 6 months of simple interest.
    • For a 4 year CD, the penalty is 9 months of simple interest.
    • For a 5 year CD, the penalty is 18 months of simple interest.
    • For 7-10 year CDs, the penalty is 24 months of simple interest.

Similar to other Discover Bank CD products, the minimum deposit to open an IRA CD is $2,500. This is also the minimum balance required to earn your interest rate. They offer both Traditional and Roth IRA CD options, with interest rates that vary depending on the CD term you choose. Terms can be as short as 3 months to up to 10 years. Their early withdrawal penalties remain the same for both IRA and non-IRA CDs.

An IRA CD is a worthwhile investment if you aren’t touching your savings and want to earn a higher APY than what’s being offered for your savings account. IRA CDs make the most sense if you’re looking for a long-term investment. While they don’t pay crazy high returns, if you have extra capital, it’s a good investment vehicle to have in your portfolio.

Opening an IRA CD account with Discover Bank can be done by phone or online, and requires an initial minimum deposit of $2,500. Funding your account can be done by phone, via check or via a bank-to-bank transfer from an existing IRA. Discover also allows account holders to initiate a direct or indirect rollover from an existing IRA.

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How Discover Bank’s IRA CD compares

Compared with other IRA CD’s out there, Discover Bank’s rates fall somewhere in the middle. The minimum deposit is higher than other offerings out there and the rates are competitive, but not high enough to be the best on the market.

Overall review of Discover Bank’s deposit products

Discover has created a suite of banking products that can compete in today’s market. Their online and mobile banking has all the necessary features to access and manage your account, and they boast a large ATM network that limits, but does not completely remove, ATM fees from your life.

Compared with the traditional big banks, Discover Bank has them beat when it comes to rates and offerings. However, if you take the entire market into consideration, adding in online banks, community banks and credit unions, Discover banking products fall somewhere in the middle.

Based on the fact that all of the reviewed products above do not have monthly maintenance fees attached to them and pay some form of interest or cash back, means you aren’t going to be wrong by opening an account. However, if you’re looking for the best of the best, Discover Bank is not quite there yet.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Jackson Wise
Jackson Wise |

Jackson Wise is a writer at MagnifyMoney. You can email Jackson here

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Earning Interest, Reviews

Discover Bank CD Rates Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Discover Bank
Most people know Discover as a credit card company, but it also operates an online bank and offers some of the best rates and terms on checking and savings accounts and certificates of deposit (CDs).

Savings account bonus offer: Earn up to $200 on your first Discover savings account

As a bank, Discover offers some of the best products on the market. Currently, they’re offering a major deal on their online savings account, which currently earns 2.00% APY. If you apply for their savings account for the very first time by 09/09/19 and deposit a balance of at least $15,000 by 09/23/19, you can earn a $150 bonus. If you deposit a balance of at least $25,000 by the same date, you can earn a $200 bonus. Applying for the account is easy as you don’t need to go to a branch. Bonuses will be credited to your account by 10/07/19. You can apply online or over the phone. Just be sure to enter or mention the promo code MM819 when you apply.

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If you’re looking for CDs in particular, Discover is currently considered to have some of the best CDs due to their customer service and digital tools.

Discover Bank CD rates

CD term

Annual Percentage Yield (APY)

3 months

0.35%

6 months

0.65%

9 months

0.70%

12 months

2.40%

18 months

2.40%

24 months

2.45%

30 months

2.45%

3 years

2.45%

4 years

2.45%

5 years

2.50%

7 years

2.60%

10 years

2.70%

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How do Discover Bank CD rates compare?

While Discover Bank CD rates aren’t always the highest available, they are consistently among the top offers across all terms. However, you may be able to find a similar or even better rate with a CD that has a lower minimum deposit than Discover’s $2,500 requirement. Currently, several nationwide banks offered a 12-month CD at a rate higher than Discover’s 12-month CD APY, while requiring a lower minimum deposit. For example, at the same time the above rates were available at Discover, there were 12-month CDs with rates as high as 2.40% APY with a lower minimum balance amount to earn the APY.

It’s always great to go for the highest interest rates possible, but keep your CD investing strategy in mind. If you’re investing in CDs using the ladder strategy, it might be easier to keep everything in one bank since you’ll be switching in and out of CDs frequently.

Discover also stands out from its competition in the CD space with its mobile app and 24/7 U.S.-based customer service. If you value such features, keep those particulars in mind when weighing Discover CD rates against others’.

What you need to know about Discover Bank’s CDs

Discover Bank is very transparent in terms of fine print. It’s not difficult to understand what’ll happen with your money after you invest it. We’ll cover the basics here about what you need to know to invest in Discover Bank’s CDs.

How to open a CD

It’s very simple to open up a CD with Discover Bank. Go to their CD webpage and click on the orange “Open an Account” button near the top right of the page. You can then choose which accounts you’d like to open. Select “CD,” choose a CD term and enter how much you’d like to deposit.

You’ll then need to complete the application by providing your name, address, date of birth, phone number, Social Security number, employment status and possibly even your driver’s license. Once your application is complete and accepted, you’ll need to fund the account.

How to fund the CD

You’ll need to fund it within 45 days of submitting your application, which you can do in one of three ways:

  • Transfer funds from another bank account over the phone. (You can only do this when you first fund your account.)
  • Transfer funds from another bank via online transfer.
  • Write a check to yourself and send it to the following address:Discover Bank
    P.O. Box 30417
    Salt Lake City, UT 84130

The minimum deposit amount for each of Discover Bank’s CDs is $2,500. Once you open a CD, you can’t deposit more money later, so it’s a good idea to make sure you have all the cash you want to invest before you open the account.

Withdrawing funds from the CD

When you want to withdraw money from your CD, the biggest thing to consider is whether that CD has matured yet, or finished its term.

If your CD has not matured, you’ve got options: You can take the interest out penalty-free at any time, or you can withdraw the principal (or the money you deposited) at any time as long as you pay an early-withdrawal penalty. This penalty varies depending on the original term of your CD:

  • less than one year: three months’ worth of simple interest
  • one year to less than four years: six months’ worth of simple interest
  • four years: nine months’ worth of simple interest
  • five years to less than seven years: 18 months’ worth of simple interest
  • seven years or longer: 24 months’ worth of simple interest

If your CD has finished its term, you can withdraw your money penalty-free, allow the CD to renew or roll it into a CD of a different term length. (More on that in a bit).

Earning interest on a Discover CD

Your CD will start earning interest on the same business day that you fund the account. The interest will be added to your account once each month, however.

When it comes to what to do with your interest, you have two options: The default option is to allow it to compound within the CD (meaning you’ll earn interest on that interest), or you can have it automatically deposited each month into another Discover bank account.

What happens once the CD matures?

You’ll get a heads-up notice about a month before your CD matures so you can decide what to do with the money. You have two main options: Either reinvest it into another CD (of the same term length or a different term length), or withdraw the money from the CD and put it into another account (such as a checking or savings account, or perhaps a CD at a different institution).

If you don’t let Discover know what you want to do with the maturing CD, the CD will automatically renew into another one of the same term length. You have a nine-day grace period after your CD automatically rolls over to make any changes or withdrawals penalty-free.

The bottom line

As far as big-name banks go, Discover offers great CD products. Wells Fargo, for example, only offers interest rates as high as 1.55% APY on a $5,000 deposit for a 58-month CD. Chase Bank offers even lower maximum rates — an abysmal 1.05% APY, and only if you can commit a minimum of $100,000 for 10 years.

If you’re the kind of person who likes to keep your finances in one place, Discover also has great credit cards, as well as competitive online savings and checking accounts. No matter how long you’re considering putting money in a CD, Discover is worth a look. Even if it doesn’t have the best available rate, it’s usually within several basis points of the top offerings and well above the average APY.

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Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here