Back in 2010, I had almost 10% of my investable assets at Discover Bank.
I maintained 12 accounts, including a savings account, 10 CDs and an IRA.
Today, I have three accounts, representing about 2% of my portfolio — and I’ve begun closing one of them (my IRA).
The reason is simple: unsatisfactory rates.
Discover is an online banking giant with more than $40 billion in deposits. It earns a 5-star Safe & Sound rating from Bankrate.com.
When I opened my first account in 2008, the bank was among the rate leaders in all deposit product categories.
Today, only its online savings and money market accounts seem up to snuff competitively.
The savings account, requiring an opening deposit of $500 but no minimum balance, carries a 0.80% APY.
(Discover no longer offers new customers “premium” savings accounts. I still have one, though, with a 0.85% APY.)
The Discover MMA requires $2,500 opening and minimum average daily balances, and offers checking privileges. Its APY is 0.70% for balances below $100,000 and 0.80% for higher balances.
Online ACH transfer limits for these accounts are relatively generous, with a combined inbound and outbound maximum of $300,000 per 30-day period.
Plus, I’ve found Discover’s website easy to navigate and its customer service representatives helpful.
But Discover’s lagging CD rates have led me to steadily withdraw funds from the bank.
Compare Discover’s APYs with highest APYs shown on our CD Rates Leaderboard:
Discover Vs. Top Nationally Available CDs
|CD Term||Discover Bank||Leaderboard Rate|
Discover posts the same rates for IRA CDs but limits flexibility by not offering IRA savings or money market accounts.
What’s really peculiar, however — and particularly irksome — is that Discover serves up some far better rate deals in the brokered CD market.
Currently, it’s offering, through Fidelity, a 5-year brokered CD at 2.00% — a rate 0.35% higher than its 5-year direct CD.
And its current 7- and 10-year brokered CDs feature coupons of 2.65% and 3.25%, respectively, compared with the APYs of 1.80% and 1.90%, respectively, posted for comparable direct CDs.
Although direct CDs permit early withdrawals upon payment of a penalty, where brokered CDs don’t, this doesn’t seem to justify the large rate disparity.
So I’m slowly but surely leaving Discover behind.
But I’ll always have the memories of good CD rates that once were but are no more.