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Synchrony Bank Review: CD, Savings Account, Money Market, and IRA Rates

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.

Synchrony Bank CD rates

You might need a higher-than-average minimum deposit for these CDs, but you’ll earn a very good interest rate.

Term

APY

3-months

0.75%

6-months

1.00%

9-months

1.25%

12-months

2.45%

18-months

2.50%

24-months

2.50%

36-months

2.55%

48-months

2.60%

60-months

2.65%

  • Minimum opening deposit: $2,000
  • Minimum balance amount to earn APY: $2,000
  • Early withdrawal penalty:
    • For CDs of 12 months or less, you’ll pay 90 days’ worth of interest
    • For CDs of between 12 months up to 48 months, you’ll pay 180 days’ worth of interest
    • For CDs over 48 months, you’ll pay 365 days’ worth of interest

You’ll need to come to the table with a fairly hefty minimum deposit of $2,000 to open a CD at Synchrony. But, once you have it, this bank offers a fair amount of flexibility in how you are paid your dividends. You can elect to roll them over in the CD account, or have them paid out to you directly in the form of a check or an electronic deposit into another Synchrony, or other external, bank account.

Once your CD completes its term, you also have a few options. Your CD will automatically roll over into another CD of the same term length, but you’ll get a 10-day grace period to make any changes. During this grace period, you can withdraw the cash, add more cash, and/or open up a new CD with a different term length.

How to open a CD account with Synchrony

You can easily open up a CD account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

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How Synchrony Bank’s CD rates compare

While Synchrony doesn’t currently offer the highest rates, they’re still consistently among the top of the pack for the current highest CD rates. Specifically, their 12-month and 60-month CDs are among some of the best offerings out there right now.

The early-withdrawal penalties at Synchrony Bank are also right on par with many of their competitors. You can rest assured that you won’t be paying inordinately high fees should you need to withdraw your cash early.

Synchrony Bank savings account

Synchrony charges no fees and offers a very high interest rate to boot.

APY

Minimum Balance Amount

2.15%

$0

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None; however, the ATM’s owner may charge a separate surcharge fee in order to withdraw cash
  • ATM fee refund: Synchrony will refund up to $5 per month in ATM surcharge fees
  • Overdraft fee: None

This is one of the most accessible high-interest savings accounts for people looking for low fees and low minimum balance requirements. While most banks charge an overdraft fee if you overdraw your account, Synchrony Bank does something different: They may not honor the withdrawal, meaning that you won’t incur an overdraft fee.

Watch out, though: you’re limited to six withdrawals and transfers per month as per Federal Regulation D (not including ATM withdrawals). If you go over that amount, Synchrony Bank reserves the right to close your account for you for “misuse.”

How to open a savings account with Synchrony

You can easily open up a savings account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license. Finally, by signing up for an account, you authorize Synchrony to run your application through ChexSystems, which checks to see if you have any negative standings with other financial institutions.

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How Synchrony Bank’s savings account compares

Synchrony currently has one of the best online savings accounts. For people looking for a no-minimum-balance account, or those looking to grow a small savings account balance into a larger one, you can’t go wrong with this account.

Synchrony Bank money market account

Synchrony’s money market account doesn’t offer very high interest rates, but does give you the power to write checks.

APY

Minimum Balance Amount

1.20%

$0

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fee: None; however, the ATM’s owner may charge a separate surcharge fee in order to withdraw cash
  • ATM fee refund: Synchrony Bank will refund up to $5 per month in ATM surcharge fees
  • Overdraft fee: None

Money market accounts technically work a little differently than savings accounts. But for you, the consumer, Synchrony Bank’s money market and savings accounts essentially operate the same way. One big difference is that the money market account offers a lower interest rate than their savings account. One other important difference is that you can actually request and write checks using your money market account, whereas the savings account doesn’t come with this option.

Otherwise, you can still expect the same withdrawal limits dictated by Federal Regulation D. You’re stuck with six transactions (minus ATM withdrawals) per month, lest the bank close your account for “misuse.” You’ll also incur few, if any, fees with this account. Given that these two accounts are so similar, we recommend going with the regular savings account, because that one offers a truly exceptional interest rate with the same terms of this money market account.

How to get Synchrony Bank’s money market account

You can easily open up a money market account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

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How Synchrony’s money market account compares

Synchrony Bank offers exceptional rates on their savings accounts and CDs. However, their money market account is a little underwhelming in the interest rate department. If you’re looking for the best money market account rates, you can easily find better accounts at other banks and credit unions.

However, Synchrony Bank still does stand out in the fee department. This account — like Synchrony’s savings account — comes with very little fees attached.

Synchrony Bank IRA rates

These IRA CDs are virtually identical to Synchrony’s regular CDs — and still, the fairly high minimum deposit requirements may exclude some savers.

Term

APY

3-months

0.75%

6-months

1.00%

9-months

1.25%

12-months

2.45%

18-months

2.50%

24-months

2.50%

36-months

2.55%

48-months

2.60%

60-months

2.65%

  • Minimum opening deposit: $2,000
  • Minimum balance amount to earn APY: $2,000
  • Early withdrawal penalty:
    • For CDs of 12 months or less, you’ll pay 90 days’ worth of interest
    • For CDs of between 12 months up to 48 months, you’ll pay 180 days’ worth of interest
    • For CDs over 48 months, you’ll pay 365 days’ worth of interest

These IRA CDs work just like Synchrony Bank’s regular CDs, with one exception: they play by the rules of IRA accounts. That means you can open them up within a Roth or traditional IRA, complete with all of the rules governing these two accounts.

Just like Synchrony’s regular CDs, these IRA CDs come with some fairly high minimum deposit requirements. This will exclude some people who can’t come to the table with a full $2,000 — but for those folks, Synchrony Bank has another option: the IRA money market account (discussed below).

If you need to withdraw your money early (if you decide to move it to another company to invest in the stock market, for example), you’ll still face an early withdrawal penalty. However, if you are at the age where you need to take required minimum distributions from CD money held in a traditional IRA, Synchrony Bank will waive the early withdrawal penalty.

How to open an IRA CD with Synchrony

You can easily open up an IRA CD account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

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How Synchrony Bank’s IRA CD rates compare

Synchrony’s IRA CDs are again very close to being the top IRA CD rates around. However, there are a few banks offering higher rates on IRA CDs, so if this is your preferred retirement savings option, it may pay to shop around.

Synchrony’s IRA money market account

This money market account — like Synchrony’s regular money market account — doesn’t offer very high rates.

APY

Minimum Balance Amount

1.20%

$0

  • Minimum opening deposit: $250
  • Monthly account maintenance fee: $0
  • ATM fee: None; however, the ATM’s owner may charge a separate surcharge fee in order to withdraw cash
  • ATM fee refund: Synchrony Bank will refund up to $5 per month in ATM surcharge fees
  • Overdraft fee: None

If you need a bit more flexibility in your retirement savings or can’t afford the minimum deposit requirement of Synchrony’s IRA CDs, you might want to consider their IRA money market account.

You can deposit or withdraw cash at any time, however you’re still subject to Federal Regulation D that limits you to six transactions per month. Since this is an IRA account, you’ll also need to stick to the rules of whichever IRA you choose — Roth or traditional — lest you end up paying a tax penalty at the end of the year.

However, in return for this flexibility and low cash requirement to open an account, you’ll pay for it with lower interest rates. You can earn much higher rates on your retirement savings with Synchrony Bank’s IRA CDs, or even with an IRA savings or money market account at another bank entirely. In fact, many of the best money market accounts out there also offer you the ability to open them as an IRA.

How to open an IRA money market account with Synchrony

You can easily open up an IRA money market account with Synchrony Bank online. You’ll need to provide some basic identifying information, such as your Social Security number and date of birth (this is required of all banks in order to comply with the USA PATRIOT Act). You’ll also need to provide a government-issued ID, such as a driver’s license.

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Overall review of Synchrony’s banking products

We really like Synchrony Bank for their low-fee, high-yielding savings products, especially their savings account and CDs. These accounts are among the top contenders for highest interest rates available.

However, Synchrony’s money market account falls a bit short in the interest rate department. Once upon a time, money market accounts offered higher interest rates than savings accounts, but today that’s often not true — and Synchrony Bank is no exception.

On the whole, however, Synchrony is a great option for people looking for high interest rates on their savings — just skip their money market account.

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.

Lindsay VanSomeren
Lindsay VanSomeren |

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

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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