Discover Personal Loans a Scam or Not?

Posted by CreditCardGuru

Using a 0% balance transfer card for a few thousand dollars is a great way to save on interest if you’re in debt. However doing that with say, $25,000, isn’t always possible in today’s economy, where credit limits just aren’t what they used to be. And hence why some turn to loans instead.

But are these loans a bad idea? Should you apply in 2013 or not?

The Discover Financial Services personal loans seem to be the most widely used (versus the other big banks). In fact, they regularly send me loan applications in the mail, even though I don’t have any credit card debt.

Discover loan application

As you can see above, the Discover personal loan application offers anywhere from $5k to $25k. At the time of this review, the advertised interest rates ranged between 7.99% to 18.99% and you could a length of up to 84 months (7 years).

Still, you probably are better off getting a 0% intro offer from a credit card. If you need to pay someone cash that doesn’t take credit cards, you could always use PayPal to send the money to them (Paypal is classified as a purchase typically).
Among numerous reviews posted on the forum, there were 2 in particular which claimed this loan offer from Discover to be a “scam” for the following reasons:

  • One guy said it because his loan wasn’t approved despite a good credit score.
  • Another guy said it because he was given an interest rate higher than the 7.99% even though he claimed to have a high score.

In a nutshell, both seemed to feel it was a bait ‘n switch however I can assure you the Discover personal loans are definitely NOT a scam. Here’s why…

  1. You may be surprised to hear that Discover and American Express have a lot in common, including the fact that both cater to those with excellent credit. In fact, many Discover cards are harder to get than AmEx cards. In other words, they are picky with who they choose. But this isn’t a bad thing… don’t you want a bank that manages their risk responsibly?
  2. Remember the advertised range is 7.99% to 18.99%. Just because you don’t get the best rate, it doesn’t make it a scam. I have seen reviews from people with only average credit scores who still go a fairly good rate. For example in 2011 this guy got $19k at 11.99% with a credit score in the low 700s.
  3. Ultimately if the personal loan is a lower rate than what you’re currently paying on your debt, it makes sense to get. Even if you get a rate 3% lower than the average APR on your credit cards, that still means you are saving money, right?

Verdict?

For large debts, the personal loans from Discover can be a good way to pay down debt at a lower rate. The vast majority of reviews I have read from customers are positive, so don’t let a couple disgruntled people talk you out of them. You should apply if you don’t want to do balance transfers.

On the other hand, even if you have $25k in debt, you may be able to transfer it at 0% if you split it between 2 or 3 different cards. Considering that there are 0% offers for almost 2 years, this may be the way to go. My recommendation would be to setup automatic bill pay on those accounts after you do them, so you don’t have to hassle with multiple bills each month.

This post was written or last updated November 7, 2013

52 comments... read them below or add your own

  1. Adrian March 29, 2014 at 2:45PM

    This is a scam , after they told me I was approved like a fool we gave them my
    Checking account number then they place me on hold and said oh you not approve
    I try speak to a manager they said the same thing
    So now I head to the news for this matter
    But please don’t apply for this loan it’s truly a scam and not real

  2. Sandra March 27, 2014 at 10:47PM

    I just received this “invitation” in the mail today. Not until near the end of all the reading material did I see you have to have a minimum income of $25K, which immediately disqualifies me. I was going to call to see how rigid that rule was because after all, my FICO score is 801 and all they are doing is giving me money I already owe, which I have proven over the years I can handle. And, I only want $5K. But after reading all these comments I think I’ll pass. My income is low because it is from Social Security which I had to take early because of disabilities. And it sounds like they’ll try to pump up that 7.99% interest rate which I hadn’t realized they would do. I probably won’t be any better off than if I just keep the status quo. I am 69 years old and my income isn’t going to get any better. And, why do YOU want my e-mail address? I don’t want to be bothered.

  3. Duck March 20, 2014 at 4:45PM

    I’ve been talking to them. Offered me 11.99%, ok BUT as I understand it yes you can pay it off early but you won’t save anything. Extra is applied to interest first. It’s NOT a mortgage, it’s more like a car loan. Rule of 78s loan. Anyone know this to be fact? If I can pay it off early and save interest ok, but adding more debt just to consolidate debt is stupid.

  4. Matt March 5, 2014 at 8:52PM

    I used the personal loan to buy a $32k investment property, yielding $850 a month in rent. I got the other $7k from a credit card. When making investments like that, it is all about getting the funding, regardless at what rate, then you just pay it off early. I applied on Monda, and had $25k in my bank account by Friday at 11.99%. High rate? Sure. But making last payment next month, just over 40 months. But I will own a rental property outright. Then as soon as I get the offer again, I will take full advantage of it to buy another rental.

    • Duck March 20, 2014 at 4:48PM

      Did you save on interest paying off early is it all front loaded and built in? As I understand it that’s how discover works. Wouldn’t you be better off borrowing against one rental property if you really own it rather than do another 12% loan? Seems to me your credit should be stellar paying off a loan early and owning a rental. What aren’t you telling us?

  5. Cyn February 21, 2014 at 2:19PM

    I took advantage of the Discover personal loan and it’s the best thing I’ve done to help get rid of my debt. In fact, I’ve actually raised my credit score 64 points in the 7 months I’ve had my loan (from 706 to 770). I used it to pay off a very high card balance, a smaller balance, and a medical bill. In case you’re wondering, I was at 18.99% on my credit card and was lowered to about 16% on the Discover loan; not a huge jump, but on a very high balance like mine, it makes a difference. I took out a loan for $24,000. I pay $516 per month and will continue to do so for the next 5 years and 5 months. I will probably pay it off early, and there is no penalty to do that. I no longer have credit card debt and it feels great to have a credit limit of $25,000 but zero balance! I’ve saved a lot of money each month and as I said, my credit score is finally getting close to the 800+ it used to be.
    It’s not for everyone, but is great for me!

  6. Paul February 2, 2014 at 4:16PM

    I don’t know what the big deal is. I had $23k in credit card debt 18% and up to 29%-got it all approved 3 years 13.99%. I could not be any happier.

  7. Scam? Probably January 25, 2014 at 6:00PM

    Received a “Discover Card Personal Loan” letter in the mail. The left part of the envelope was ripped open making it appear someone tampered with the envelope is my belief as the edge was perforated almost too perfectly. Inside the language says all someone needs is the invitation number to take out a loan in your name. While I could be wrong, it sounds like this is a clever ploy to lure people in out of fear their identity was compromised. We are calling the postal service as well as the BBB if all facts align. To opt out they need your social security number. I don’t think so. Has this happened to anyone else? I can say for certain Discover the truth about these knuckleheads.

    • Dave January 28, 2014 at 10:27AM

      EXACT same thing just happened to me (received Jan. 27, 2014). Left side of the envelope very neatly sliced open. Of course, the first thing I think is that someone is trying to steal my identity… then again, why would someone who wanted to do that not simply take the whole envelope? I didn’t ask for Discover to send me this, and I would certainly not think anything amiss if I never saw it. Is it possible Discover is doing this themselves to get people to call?

    • Mike January 30, 2014 at 9:29AM

      Same thing happened to me. I received the letter in the mail yesterday (January 29th) and my mind immediately ran amuck thinking someone had taken my info and opened a loan in my name. Any result from the Postal Service or BBB? Has anyone tried contacting Discover directly?

    • girly February 6, 2014 at 1:59PM

      Discover recently had a defect in a machine that was slicing the left edge. A rare mistake they’ve gotten fixed. Besides, all that invitation # gives access too is your name and address. No extra security risk than you’re own mother writing you. Also, they only need your name and address to opt you out. Besides, opting out is stupid since they’re by invitation only so if you opt out you can never get a loan in the future when you may need it. Also, the invitation says you can apply for $2500 to $25k and just lists the increments of $5k to give you an idea of what you’re payments will look like. Discover also is simple interest w/a set end date and cc’s are compounded interest w/no end so 18.99% at 7 years is better than 0% that will jump up higher than normal after a mere 2 years w/a balance transfer fee.

    • girly February 6, 2014 at 2:00PM

      Also it’s a personal loan, not a debt consolidation loan, so it’s still useful even if you don’t have debt.

    • JP February 14, 2014 at 3:54PM

      the only reason I’m here is because mine was ripped open too.

  8. Matthew Temkin January 19, 2014 at 11:35AM

    I took out a $5,000 Discover loan at a rate if 8%.
    Monthly payments were $126 for 4 years.
    After 2 years i paid it off in full.
    Count me as a satisfied customer–how can I apply for a new loan through them??

    • Lana April 4, 2014 at 3:00PM

      Hi,
      I saw your post about a $5,000 discover loan and had a question. Did they ask for income verification such as your W-2′s and or pay stubs?
      Also was there any penalty fees or exit fees for paying off your loan early?

  9. ScammedByDiscoverCard December 8, 2013 at 6:28PM

    I responded to the Discover Card Personal Loan Mail Offer for $25,000 with APR as low as 6.99%. I gave the other Credit Card information to the Discover Card Personal Loan representative and stated that I did not want the loan unless I could pay off the other Card in full and it was lower than $25,000 and they lady told me I was approved. Discover Card did a Bait and Switch and opened a Credit card and sent Blank front Credit Cards and a partial payoff to the Credit Card I had provided with a huge Transfer Fee and now I have 2 Crediit Card Payments instead of one with a higher balance because of the BT Fee. I called to complain and each employee said they would follow up with called the Mortgage department. Each time I was forwarded to Discover Cards Fraud Department. One employee told me I applied by mail for a Credit Card and I said to send me proof and Discover Card said they could not do that and I said I know because you don’t have proof. This is called Bait and Switch does anyone know a law firm interested in a Class Action Lawsuit because I cannot be the first person Discover Card pulled this on.

  10. Bill November 21, 2013 at 7:18PM

    Wow, what a disappointment Discover’s turned out to be! I have decades of good credit history and a FICO of 780+, own my own home, make a 6 figure income, and have a total of $11-$12k in debt, including my car loan.

    I’ve always just tossed the Discover letters in the recycling bin, but I figured that 6.99 is better than the 8.99 rate on my credit card, so what the heck?

    I was shocked to learn that my approval rate was 9.99! I feel like I’ve been baited into a pretty attractive offer that they make almost impossible to get. And, though they admit that my credit is strong, they can’t tell me why I didn’t get their best rate.

    Overall I’d say that Discover is running a scam operation. My opinion of this company now is such that they will NEVER be receiving any business from me in the future.

  11. angryatdiscover November 18, 2013 at 7:58AM

    Discover sent me an application, with an included invitation number. I filled out the application online and was declined. I called and asked the rep for the reason why and was advised that it was due to, “too many recent inquiries for store credit cards” — this *could* be because I applied for a TJMaxx card 3 days ago. LOL

    My credit score is 774 — with a stellar history. I asked the rep to remove me from future mailings and invitations. She agreed. Following, I called and cancelled my Discover credit card.

    No loyalty — it’s ALL a scam. I’ll never do business with Discover again — in any way. PERIOD.

    • dee April 22, 2014 at 6:14AM

      You shouldn’t have closed your account. It could hurt your score in the long run. Stop applying for the damn store cards. With a 774 you will benefit more from a conventional credit card like the Discover card you canceled. You need to get a copy of your credit history and see why you only have a 774 score because you want to be 800+. Stop using “lol” it makes sound like an idiot.

      The offer is not a scam; it just was not meant for you.

  12. decame August 30, 2013 at 6:29AM

    Applied yesterday for $14.5K to considate two credit cards currently at 1.99% but in a few months they would have gone to 19.99%. They were very nice, asked a few questions got approved for the total amount at 6.99% for 4 years in less than 10 minutes. It is nice to finally put to bed this final debt and worry rolling over every 12-18 months. My credti score if 760 so I do not see as to why all these people had problems or were quoted much higher rate.

    • Meghan October 6, 2013 at 9:09AM

      I asked for $12,000 to be paid directly to my credit cards (currently at 10.99%) and Discover offered me a 9.99% loan. My credit score is 770 and I make about $50K-$60K a year depending on bonuses and overtime. Mind you, I’ve been at the same company for more than a decade too. The agent from Discover could not even explain HOW to get to the 6.99% rate either.

  13. Shobe August 4, 2013 at 3:26PM

    I applied for a personal loan at Lending Club. They have better rates than Discover and the reps are very helpful. I got my money in 3 business days.

  14. Darek August 1, 2013 at 2:42PM

    I have a credit in 800 and after filling out the application called them they try to get me for 18% rate it is a joke.. they do suck

  15. Concerned July 10, 2013 at 10:12AM

    Just called after filling out the application. The gentleman’s first question is what is your social security number? In the background you can hear lots laughing and other customer reps repeating customer information. Um, no, can I speak with your supervisor. He says yes but he will ask you the same question. Sure I will hold. After holding for 10 minutes, I decided to go with my gut and hung up. I filled out everything online so probably just got the hard inquiry on my credit report which I am upset about, but I did not feel comfortable further providing my information to this unprofessional company that answered the phone. In addition, the phone number they told me to call them at to confirm my loan is different than the phone they sent in the email to confirm. Way to build my trust Discover!

  16. Rich June 3, 2013 at 2:31PM

    The total interest to be paid over the life of the loan is factored into the total amount so even if you pay off lets say a 5 year loan early, you will still pay the total amount of interest for the five years

    • PAUL July 8, 2013 at 8:59AM

      Rich, How satisfied are you in your loan so far?

  17. Marie Boolay May 14, 2013 at 2:54PM

    I just got $15,000 at 6.99% for 60 months. It’s like buying an invisible car.

    • Ann June 26, 2013 at 8:13AM

      Hi Marie,

      Just wondering if your credit score is good or great? I received an invitation but don’t like inquiries on my credit. I don’t want to apply and get turned down. My credit is good but not a 750 or 800

  18. Naren March 26, 2013 at 5:30PM

    Can non immigrants in USA can get this personal loan? I got an offer from Discover personal loans, but not sure if this is applicable only for US citizens.

    • Nania October 10, 2013 at 2:43AM

      Rates are systematically done based off what your credit shows not necessarily your score if u hAve had recent inquires new account highly utilized accounts etc.

  19. Patricia March 18, 2013 at 10:20AM

    So we applied for this loan for amount of $17K to pay our CC debt consolidate. We wouldn’t need that much but we would like to make our budget more organized. We have $140K household income last year and with mortgage, cars and student loan our debt is around $400K total (not too bad for income vs debt ratio) we got approved for 15.99%!! We said NO! If not 7.99% we won’t get it. Rep was so annoying and told me that it won’t be that low but we can re-apply with in 7 days to get better rate. Credit score is 720. I really think it is not scam but false advertisement! I decided not to use their anything anymore!

    • Ronnie March 23, 2013 at 7:37AM

      The same thing happened to me last night. Approved for $10k at 17.99%. When I said ‘no thanks’ a supervisor got on the phone and offered 15.99%. With a score over 750, good income etc., I was expecting a lower rate. They are persistent and said they would give me time to think about it. I’m passing.

  20. Soni Khinda February 24, 2013 at 12:53PM

    discover personal loans is totally scam. There high school loan officer just practicing on you credit. Mr james don’t know how many days in February month he think all month has 30 days only. Totally inexperienced people. He have 4 excuses on my loan. They pull my credit report 2 times in 4 weeks.
    1. invitation expire
    My answer – no because I call 800 # 2 days before invitation expire, I gave him couple of examples. After that he is say ya invitation not expire.

    2. Application expire – now he told me your application expire because its 30 day in process.
    Ans- its not 30 days even today’s is last day,no body told me in starting,no body contact me no letters how can its expire and if you know it’s expire why you pull my credit report again.he say I don’t know before just find that. He don’t have any experience. I say it’s 29th day how to application expire. After that he say ya it’s ok but your invitation is expire.

    It’s short cut story -loan application with 2year tax return (sent by fax)

    3 invitation expire- again he say invitation expire. I say you just told me invitation is ok, he say ya not invitation applications is expire. You told me application expires in 1 month how to my application expire in 29th day.
    4.now he say invitation expire. Oh god he just reading on computer screen same words .
    Now I wanna talk with manger or supervisor
    He transfer after 8min hold he say my supervisor looking your file he contact you
    He say nothing about any expiration all good
    We contact you in 2-3 days
    Now same thing got letter not approve
    I think because I don’t have any missing payment in last 10 year
    I don’t have any bad credit history
    Good income no job lose history
    No late house payments
    And caring all another related good things
    Not fair, see how discover helping a build American economy

    • nick July 1, 2013 at 12:35PM

      learn how to speak and write english!

      • test September 5, 2013 at 5:20PM

        that’s what they know…do you know english better than any one ?

      • no_one September 30, 2013 at 6:03PM

        Can you speak/write any language other than English?

    • kenichiro September 9, 2013 at 6:41PM

      same thing happen here, they send me an invitation, and funny thing is I am so confidence asking for the best rate, but they rejected me because this following reason:
      *I have a low risk credit
      *never miss any payment on my history
      *only using 9% of my credit limit
      *for having excellent credit score (734)
      *never late on my payment
      *a good self employment income..
      a good lesson for me next time not to wasting my time for crap like this…

      • Nania October 10, 2013 at 2:46AM

        I love it when people think they are always approvable for the lowest rate possible first you have to be a us citizen to apply! Even if your credit score is good

  21. JP December 14, 2012 at 4:51PM

    Memo: just because you have a high credit score doesn’t mean you are guaranteed a low interest rate on a loan. Work history, income and current debt profile also play a role. That doesn’t mean Discover is a scam, it means they give out credit based on a comprehensive risk profile.

  22. Vicky December 2, 2012 at 11:12PM

    I applied online. When they did a followup phone call and asked me what I wanted to do with the $23K, I said refinance a loan. When they asked the current credit rate I was paying I told them (it was 9.75%). Then I added “If you can’t give me the 7.99%, I don’t want the loan.” They approved it. I think you need to be in a position to walk away to get the lowest rate. They probably think you’ll take anything 1-3% lower than what you are currently paying. Perhaps counter-offer if they don’t go as low as you expect to get a better deal. FYI..My credit score is over 750.

  23. Imtiaz October 19, 2012 at 9:08AM

    I had the same experience like others mentioned. They sent me an offer letter for 7.99%, but when I applied online they told me to call the 800 number and gave me 11.99%. I was surprised to get that offer since I have excellent credit score, which I believe was 780 at the time of application. It’s true that they charge only interest in the beginning and even if you pay more in the principle they would extend your next payment for a few months so that they can charge interest during that period. In my opinion, it might not be a scam, but at the same time not a very good option because of payment extension and charging interest for that period with no payment option. Personally, I would not recommend for borrowing this loan as you will be trapped with interest only payment in the beginning. In my view, most of the financial organizations have corrupt practices of similar as mentioned here or other types. But, when they get caught by our government, they end up paying millions to billions in penalties. The government should look into the salaries of the CEOs and other higher ups who make > million dollars per year from our hard earned money by using these type of promotions and schemes.

  24. Jonathan October 11, 2012 at 9:52AM

    I think they bill the interest up front, I came here trying to understand it better. I have 3 payments of 400 and they have taken out 500 in interest already. You dont have to get auto pay, but they offer less APR for it.

  25. Jeff September 23, 2012 at 6:00AM

    Paying back large CC debt in 5 yrs or less is a great step…without repeating the sins.

  26. Jeff September 23, 2012 at 5:58AM

    I would bet that the best interest rates are at the lower duration..which might be overstating the obvious. Also, a 25 yr old with $13k debt vs a $45 yr old with same would also be viewed differently. However, 25 yr old male vs 25 yr old female or comparison at any age would be very interesting.

  27. John September 11, 2012 at 1:33PM

    I heard Discover bills the interest for the initial duration of the loan as a “finance charge” which you are required to pay regardless of when you pay off the loan. Is that correct?

    • deebee January 13, 2014 at 10:57AM

      What alot of people don’t realize is that Discover takes into account, your overall debt to income ratio. To be approved for the loan. You can’t make 30*k a yr then have 25*k in debt and expect to be approved at the lowest rate if you don’t plan on consolidatiting that debt. It would be too much risk for the firm. This is just my personal opinion from years of working in the finance industry. I applied and wasn’t approved but understood the reason why before the rep even told me the answer. It was a long shot but I wanted a personal loan to pay off my doctors bills.

  28. Dennis R Smith August 8, 2012 at 2:10PM

    How do you get this offer sent to us?

    • Emilie March 13, 2013 at 8:49AM

      I was researching these Discover Loans and somehow, Discover tracked me. 2 weeks later, I got an invitation in the mail. Spooky, but I wanted one, so I guess that’s what you’ll have to do.

  29. Tammy July 17, 2012 at 6:11PM

    I have about 13,000 in Credit Card Debt ranging from 11-21%. Discover offered me a loan at 15.99% for 72 Months . I had a loan with Citifinancial (OneMain) but the interest was at 18% for 5 years, but I paid it off early by making on time payments and putting a little extra on it when I could. Do you feel that this would be a good idea for me. I have tried the balance tranfer thing but, I did feel as if I made enough progress with debt reduction using these. I quess my question is do you think over all the loan would be a good idea?

  30. Ali May 16, 2012 at 4:44PM

    I have a credit score of 860 and I wasn’t approved but they got all my information.

    • CreditCardGuru May 17, 2012 at 10:35PM

      The highest FICO score is 850, so you must be talking about a VantageScore (which runs up to 990… so 860 is definitely good, but not great). Regardless, I’m still surprised to hear you were denied.

      • Jojo September 11, 2012 at 10:31AM

        Is it possible to use this and not have them use automatic withdrawal. I rely heavily on the option to send the payment in when my company pays me, not when they feel like pulling money.

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