Discover does offer certificates of deposit, and they work like most bank CDs—you deposit money for a fixed term and earn a set interest rate

Discover Bank offers CDs (certificates of deposit) through its online banking platform. A CD is a savings product where you agree to leave money untouched for a specific period—typically three months to five years—in exchange for a fixed interest rate. Discover's rates change based on market conditions and the term length you choose, so the rate you see today may not be the rate available next week.

The main difference between a Discover CD and a traditional bank CD is that Discover operates entirely online. There are no branches, no paperwork to mail in, and no phone calls required to open an account. You fund the CD from your bank account, and the money sits in Discover's system earning interest until the term ends.

Key Takeaways

  • Discover CDs let you lock in a fixed interest rate for a term ranging from three months to five years, with rates that vary by term length and market conditions.
  • You can open a Discover CD entirely online using your existing Discover Bank account or by opening a new one, with no minimum deposit requirement in some cases.
  • When your CD matures, Discover automatically renews it at the current rate unless you tell them otherwise, so you should plan ahead if you want to move the money.
  • Early withdrawal from a Discover CD triggers a penalty that reduces your earnings, and the penalty amount depends on the term length of the CD you opened.

How Discover CDs compare to savings accounts and money market accounts

Discover offers three main deposit products: savings accounts, money market accounts, and CDs. The key difference is flexibility versus rate. A Discover savings account has no term—you can withdraw money anytime without penalty—but the interest rate is lower and can change at any time. A money market account sits between the two: it pays more than savings but less than a CD, and you can write checks or make transfers, though there are limits.

A CD locks you in. You cannot touch the money without paying a penalty, but in return you get a higher rate that does not change for the entire term. If you know you will not need the money for six months or a year, a CD typically pays more. If you might need it sooner, a savings account is safer.

CD terms and interest rates at Discover

Discover offers CD terms of three months, six months, one year, two years, three years, four years, and five years. Longer terms usually pay higher rates, though this is not always true—sometimes a two-year CD pays more than a three-year CD depending on where interest rates are heading. You can see all available rates on Discover's website before you commit.

Interest rates on Discover CDs change frequently, sometimes daily. The rate you lock in is fixed for your entire term, but when your CD matures and renews, the new rate will be whatever Discover is offering at that moment. If rates have fallen, your renewal rate will be lower. If rates have risen, it will be higher. This is why it matters to check the maturity date on your calendar and decide what to do before the automatic renewal happens.

How to open a Discover CD and fund it

You can open a Discover CD through the Discover Bank website or mobile app. If you already have a Discover checking or savings account, you can add a CD to that account in a few minutes. If you do not, you will set up a new Discover Bank account at the same time, which takes about ten minutes and requires your Social Security number, address, and a valid ID.

To fund the CD, you transfer money from an external bank account—yours or someone else's. Discover will ask for the routing and account number of the bank you are transferring from. The transfer usually takes one to two business days to complete. Once the money arrives, your CD term begins and interest starts accruing when ready.

What happens when your CD matures

When your CD reaches its maturity date, Discover automatically renews it for another term of the same length at the current interest rate. This happens without any action on your part. If you do nothing, your money stays locked in a new CD.

If you do not want to renew, you have a grace period—usually seven to ten calendar days after maturity—to withdraw the money or move it to a different product without penalty. After the grace period ends, the renewal takes effect and you are locked in again. Check your maturity date well in advance and log into your account during the grace period if you want to do something different with the money.

Early withdrawal penalties and what they cost

If you withdraw money from a Discover CD before the maturity date, you pay an early withdrawal penalty. The penalty amount depends on the term length. A three-month CD has a smaller penalty than a five-year CD because Discover loses less interest income when you leave early. Discover publishes the exact penalty for each term on its website, so you can calculate the cost before you open the account.

The penalty is deducted from your interest earnings first. If you have earned enough interest to cover it, the penalty comes out of that. If you have not earned enough interest yet, the penalty comes out of your principal—the money you deposited. This means an early withdrawal can result in you getting back less than you put in.

Tax reporting and interest payments

Interest earned on a Discover CD is taxable income. At the end of each calendar year, Discover sends you a Form 1099-INT showing how much interest you earned. You report this on your tax return. Interest is taxed as ordinary income at your regular tax rate, not at a lower capital gains rate.

Interest accrues daily but is paid monthly. Each month, Discover adds the interest to your CD balance, and that balance earns interest the following month. This is called compounding. The longer your term, the more compounding works in your favor, which is one reason longer CDs pay higher rates.

Frequently Asked Questions

Can I add money to a Discover CD after I open it?

No. A CD is a fixed deposit. Once you open it, you cannot add more money to that specific CD. If you want to deposit additional funds, you would need to open a separate CD or put the money in a Discover savings account.

What is the minimum deposit to open a Discover CD?

Discover's minimum deposit for CDs varies and changes based on current promotions. Check the Discover website for the current minimum, as it may be zero dollars for some terms or higher for others.

Is my money safe in a Discover CD?

Yes. Discover Bank is FDIC-insured, which means deposits up to $250,000 per account owner are protected by the federal government. Your CD balance counts toward this limit, so if you have $200,000 in a CD and $100,000 in a savings account, only $250,000 total is covered.

Can I move a Discover CD to another bank before it matures?

You can withdraw the money and move it, but you will pay the early withdrawal penalty. There is no direct transfer option for CDs like there is for some other accounts. Withdraw during the grace period after maturity if you want to avoid the penalty.

What happens if interest rates drop after I open my CD?

Your rate stays the same for the entire term. This is the benefit of locking in a CD—you are protected if rates fall. When the CD matures, the renewal rate will reflect the lower market rates, but your current CD is unaffected.