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(iv)   For Formal Trust Accounts, as defined in Section 6(c)(i), we 

must receive a correctly and fully completed Formal Trust 

Account Application and Trustee Certification Form before 

we will open your Account.

(4) FDIC INSURANCE

Funds in Discover Bank Accounts are insured by the Federal 

Deposit Insurance Corporation (“FDIC”) to the maximum 

allowed by law. For more detailed information on FDIC insurance 

coverage, contact the FDIC directly by visiting www.fdic.gov or  

by calling 1-877-ASKFDIC (1-877-275-3342), (TDD:  

1-800-925-4618).

(5) INTEREST

 •  Interest is compounded daily, credited monthly, and 

calculated on a 365-day basis for interest-bearing Accounts.

 •  We use the daily balance method to calculate the interest 

on your Account. This method applies a daily periodic rate 

to the balance in the Account each day.

•  If we receive your deposit before your Account is opened, 

interest will begin to accrue on the deposit on the Business 

Day your Account is opened. Once an Account is opened, 

interest begins to accrue on a deposit on the Business Day 

we receive your deposit.

 •  For contributions to an IRA CD under an IRA Plan, interest 

begins to accrue on a contribution on the Business Day 

we are in receipt of your contribution and your correctly 

completed Contribution Form and Signature Card. See 

Section 3(iii) for additional information regarding opening 

an IRA CD. 

(a) Certificates of Deposit

(i) Non-IRA CDs

•   The maturity date, interest rate and annual percentage 

yield (“APY”) in effect on your application date, for 

your Non-IRA CD will be disclosed to you at the time of 

application. However, the interest rate and APY on your 

Non-IRA CD will be determined and the interest rate will 

be fixed based on your funding date, not your application 

date. 

•   Once we receive funding for your Non-IRA CD, your 

interest rate and APY will be determined as of the date of 

receipt of the funds and the interest rate will be fixed for 

the term of the Non-IRA CD.

•  If we receive your Non-IRA CD funding within ten (10) 

days (including your application date) of when your 

application is submitted, your Non-IRA CD interest rate 

and APY will be the highest of the interest rates we 

offered (applicable to your Non-IRA CD) on either: (1) 

the date you submitted your application, (2) the date 

your Account was opened, or (3) the date we received 

your funding. If we receive your funding more than ten 

(10) days (including your application date) after your 

application date, your Non-IRA CD interest rate and APY 

will be the interest rate and APY we offer (applicable to 

your Non-IRA CD) on the date we receive the funding.

•   The interest rate, APY, and maturity date for your Non-IRA 

CD will be confirmed in your Welcome Kit. 

•   You will have 45 days (including your application date) to 

fund your Non-IRA CD from the date you submit  

your application.

(ii) IRA CDs

•   Your IRA CD interest rate is fixed for the term of your  

IRA CD.

•   Your IRA CD interest rate and APY are determined and 

established at the later of when (i) a correctly completed 

IRA application, Signature Card, and Contribution Form 

have been received and (ii) your IRA CD has been funded.

•   We will send you written confirmation of the interest rate, 

APY and maturity date of your IRA CD after it is opened  

or funded.

(iii) Interest Earned During the Grace Period

Interest will not accrue during the Grace Period (as defined 

in Section 19); however, if some or all of your CD is 

renewed, a catch-up accrual will be processed at the end 

of your Grace Period for interest earned at the interest rate 

that was in effect on the date your CD matured (the “CD 

Renewal Rate”). The catch-up accrual will be calculated  

as follows:

a.  If your CD renews automatically (the default setting), 

or as a result of your affirmative instructions, interest 

at the CD Renewal Rate will be applied to the amount 

of your renewed CD at the end of your Grace Period 

retroactively to the start of your Grace Period.

b.  If a partial withdrawal is made during the Grace 

Period, the withdrawn funds will earn interest at the 

CD Renewal Rate from the day after the maturity date 

to (and including) the day of withdrawal.

c.  If you add to your principal during the Grace Period, 

(1)interest at the CD Renewal Rate will be applied 

retroactively to the start of your Grace Period for the 

original principal amount, and (2) interest at the CD 

Renewal Rate will begin to accrue for the amount that 

you add as of the date of the additional deposit. 

Interest will not be earned during the Grace Period if you 

elect not to renew your CD as specified in Section 19.

(iv) General

(a)(i) General CD Terms:

•   Any confirmation letter or notice you receive after 

opening a Non-IRA CD or an IRA CD is not a certificate 

or other instrument and is not transferrable, except on 

our records.

•  The APY assumes interest remains on deposit until 

maturity.

•   A withdrawal of interest or principal will reduce 

earnings.

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• Interest will be paid to and remain in your CD if:

     – You do not specify an interest disbursement option;

     –  The Account you have designated to receive interest 

payments is closed; or

     – Interest payments are returned. 

(ii) Non-IRA CDs:

•  During the term of your Non-IRA CD, interest earned on 

and posted to your Non-IRA CD may: (i) remain in your 

Non-IRA CD, (ii) be sent via an official bank check, (iii) 

be transferred to an eligible Discover Account that you 

own, or (iv) be, for Non-IRA CDs currently enrolled, 

transferred to an external bank account at another 

financial institution, provided that the financial 

institution allows such transfers. Non-IRA CD Accounts 

currently enrolled in the external bank account 

interest disbursement option will continue to receive 

interest under this method. Any change in interest 

disbursement for Non-IRA CDs will be limited to 

options (i) (ii), and (iii) above. For interest transfers to 

an external bank account, the transfer will be initiated 

on the date the interest is posted to your Non-IRA CD 

each month and will be delivered to the external bank.

(iii) IRA CDs:

•  During the term of your IRA CD, interest earned on and 

posted to your IRA CD may: (i) remain in your IRA CD, 

(ii) be transferred to an eligible Discover Account that 

you own, subject to you providing written distribution 

instructions or (iii) be transferred to an external bank 

account at another financial institution, provided that 

the financial institution allows such transfers and you 

have provided us completed distribution instructions. 

For interest transfers to an external bank account, 

the transfer will be initiated on the date the interest 

is posted to your IRA CD each month and will be 

delivered to the external bank.

(b) Money Market Accounts and Savings Accounts

Your Money Market Account or Savings Account earns interest 

at interest rates established by us on a daily basis. Money 

Market Account interest rates and APYs are applied, based 

on your account balance and the applicable balance/interest 

rate tier. At our discretion, we may change the interest rate 

and APY on your Money Market Account or Savings Account 

at any time. Any change in the interest rate and APY will be 

effective on the date of such change. Interest is accrued daily 

after debits and credits are posted to your Account.

(c) Checking Accounts

Your Checking Account does not earn interest. However, 

special promotions and bonuses may be treated as interest 

for tax information reporting and other purposes.

(6) ACCOUNT OWNERSHIP

The following chart sets forth the account type and eligible 

ownership categories:

Checking 

Account

 Savings 

Account 

Money 

Market

Non-IRA 

CD

IRA CD

Individual

Account

P

P

P

P

Joint

Account

P

P

P

P

Formal Trust  

Account

P

P

Informal Trust  

Account (POD)

P

P

P

P

Custodial 

Account

P

P

P

Estate

Account

P

P

Individual

Retirement

Account

P

Guardianship

Account

P

P

P

 

You may not open more than one (1) Cashback Debit Account 

per customer, including individual and joint accounts. For 

customers who currently have more than one Cashback Debit 

Account, but no more than five Cashback Debit Accounts, the 

limit will not apply to the existing accounts but no additional 

Cashback Debit Accounts will be opened.  

The following is a more detailed description of the ownership 

categories:

(a) Individual Account

An Individual Account is an Account held solely by one natural 

person (i.e., a living person) without a designated beneficiary.

(b) Joint Account

•   A Joint Account is an Account held by more than one natural 

person. All Joint Accounts are established as joint tenancy 

with right of survivorship only. Joint with right of survivorship 

means that if an owner of a Joint Account dies, the balance 

in the Joint Account passes to the remaining owner(s) of the 

Joint Account. We do not offer any other type of joint account 

(i.e., tenants in common or tenants by the entirety).

•   If a Joint Account is established without the signature of 

one of the joint owners, we are not obligated to accept 

instructions from that joint owner but may do so at our 

discretion, and you agree to hold us harmless based on our 

reliance upon your designation of the joint owner for whom a 

signature was not provided.

•   Any funds deposited to a Joint Account by any of its owners 

shall be owned by all joint owners.

•   Each owner of a Joint Account may deposit to, make 

withdrawals or transfers from, or issue stop payment orders 

with respect to the Joint Account without notice to or consent 

from any of the other owners of the Joint Account.

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