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Discover®️ Roth IRAs Review


ConsumersAdvocate.org Rating: 2.6 / 5 (Average)
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Discover Financial Services, Inc. was founded in 1985 as a subsidiary of Sears, but was sold in 1993 and became an independent company in 2007. Headquartered in Riverwoods, Illinois, the company offers Discover and Diners Club credit cards and banking services. It offers Roth IRA certificates of deposit.
 
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How is Discover rated?

Breakdown

2.0/5
IRA Types
1.0/5
Investment Options
5.0/5
Account Features
1.5/5
Fees and Discounts
4.5/5
Reputation and Customer Support

Overall Rating: 2.6 / 5 (Average)

The only Roth IRA product Discover offers is a certificate of deposit. This makes it a poor choice for people who want a mix of investments in their Roth IRA portfolio and who want all their retirement assets under one roof. Further, the minimum initial deposit of $2,500 may limit Discover's appeal to retirement investors who already have a decent amount of money saved up. Still, Discover's CDs pay comparatively high interest rates and may be attractive to very conservative investors and to those who don't mind having their Roth IRA spread out among different financial services companies. The firm is on a mediocre financial footing, but since CDs are federally insured up to $250,000, this may not be as much of a consideration as it would be for brokerage firms. Discover doesn't offer the breadth of communication and money management options that other firms do, but what it does offer seems adequate for the management of low-maintenance CDs. Discover is probably best for established investors who want CDs in their Roth IRA investment mix and who don't mind spreading out their retirement assets over more than one financial services firm.

Discover Account Minimums

IRA Types - 2 / 5

The minimum investment required to open a Discover Roth IRA CD is $2,500. This may present a barrier to people who are just beginning to save for retirement.
How much money do you need to start?
2,500
How much do you have to keep in your account?
2,500

Discover Investment Options

Investment Options - 1 / 5

Discover's Roth IRA investment options are limited to CDs, which may be purchased with maturity dates ranging from three months to ten years. While Discover pays a higher interest rate than many of its competitors, the lack of other types of investments may prompt all but the most conservative savers to look elsewhere. However, for investors who want CDs to be part of their Roth IRA mix and who don't mind dealing with different companies, having a Discover Roth IRA CD and another Roth IRA account at a different financial services firm may be a sound option.

How can I invest my money?

Mutual Funds
Index Funds
Stocks
Bonds
Money Market Accounts
Certificates of Deposit
ETFs
Options

Discover Fees and Commissions

How much do they charge?

Discover doesn't charge to open a Roth IRA CD or to disburse the funds when the CD matures. As with all CDs, though, there is a penalty for withdrawing funds before the CD matures.

Account Features - 5 / 5

There is no charge to open a Roth IRA CD. This makes it a good option for those savers who are determined to avoid fees. However, there are penalties for early withdrawal. Those penalties imposed by Discover are in addition to any taxes or tax penalties that may result from withdrawing funds from a Roth IRA before age 59 1/2.

Discover Financial Reputation

Fees and Discounts - 1.5 / 5

Discover Financial Services, Inc. falls into the lower medium grade of ratings for financial strength. Since the firm is not a brokerage, it is rated by FINRA. However, the Roth IRA CDs it sells are backed by the Federal Deposit Insurance Corporation (FDIC), so unless the US government itself fails, it is highly unlikely that investors will lose any money purchasing Discover CDs as part of a Roth IRA account.
What's their Moody's rating?
Baa3
What's their Standard & Poor's Rating?
BBB-

Discover Online Experience

Reputation and Customer Support - 4.5 / 5

Discover's website is compact and easy to navigate. It uses calculators, easy-to-read charts, and links to more detailed articles to clearly explain the pros and cons of a Roth IRA CD. While the range of information it provides is limited to those products, it's presented in a user-friendly format.

What's their website like?

Discover's website emphasizes their card and banking services. It presents informational articles about its Roth IRA CDs that include helpful tables and calculators. These can be used to calculate what a CD will be worth at maturity and the amount of money you can contribute per year.

Discover Methods of Contact

How do I communicate with them?

App
Phone
Chat
Email
Branch

Methods of Contact - 3.5 / 5

Discover gets good marks for being accessible by phone 24/7. It also has an app, though it's unclear whether the app would have much to do with managing a CD. Documents can be securely uploaded through a dedicated portal, but the firm has no live chat option. Since CDs are low-maintenance investment options, these limited methods of communication are likely adequate for most Discover Roth IRA CD account holders.

Discover Advisors

Advisors - 0.5 / 5

Because Discover only offers Roth IRA certificates of deposit, its advice is limited to suggestions about maturity dates and CD options. The company does not offer advice on an overall retirement or Roth IRA strategy.
What kind of advisors do they have?
Human Advisors
What should I know about their advisors?
Discover advisors can be reached by phone 24/7 and offer counsel on Roth IRA CD purchases.

Discover Promotions

Promotions - 5 / 5

Discover does not generally offer promotions on its Roth IRA CDs.

What special promotions could save me money?

None available.

Company Profile

Full Name
Discover®️ Roth IRAs
Company Website
https://www.discover.com
Headquarters
2500 Lake Cook Road, Riverwoods, IL, 60015

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Top Rated
  • Offers Roth IRA certificates of deposit (CDs)
  • Interest rates are higher than many competitors'

Discover offers a dedicated Roth IRA CD, which can be purchased with maturity dates ranging from 3 months to 10 years. Although Discover does not offer other Roth IRA options, it can be a good choice for people who want CDs to be part of their Roth IRA portfolio.

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