Whether you’re looking for a supplement to a 401(k) or a standalone investment account, an IRA can be a good choice. Although your IRA can hold various investments, you might pick IRA CDs for their safety, high APYs and guaranteed rates of return.
In this article, we at the MarketWatch Guides team discuss our five picks for the best IRA CD rates. We also explain types of IRA CDs, limitations, rules, alternative accounts to consider and tips on when and how to use IRA CDs for long-term saving.
Key Takeaways
- Acertificate of deposit (CD) can be a safe way to save money in your individual retirement account (IRA) while still benefiting from high yields.
- The best IRA CD rates are currently around 5% annual percentage yield (APY).
- While traditional IRA CDs offer a tax break when you contribute, Roth IRA CDs can give you tax benefits during retirement.
- Factors that influence IRA CD rates include economic conditions, the financial institution offering the product and the CD amount and term length.
Featured CDs
Best IRA CD Rates
Our research team reviewed IRA CD rates from 115 banks and credit unions. To create our list of the best IRA CD rates, we selected CDs from financial institutions that have:
- A traditional or Roth IRA CD product
- National availability
- Up to $250,000 in insurance from the Federal Deposit Insurance Corp. (FDIC) or the National Credit Union Administration (NCUA)
- An APY that is more than twice the national average interest rate for similar CD terms
| Financial Institution | APY* | Term | Minimum Opening Deposit |
|---|---|---|---|
| Alliant Credit Union | 4.75% | 1 year | $1,000 |
| Consumers Credit Union | 4.88% | 13 months | $250 |
| Ally Bank | 4.50% | 1 year | $0 |
| Synchrony Bank | 4.60% | 1 year | $0 |
| Discover Bank | 4.50% | 1 year | $2,500 |
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IRA CDs are available in a variety of term lengths. For this list, we looked at all IRA CDs from each financial institution but focused on highlighting CDs with term lengths around one year. We excluded jumbo CDs, which often have minimum opening deposits of $75,000 or more.
- Alliant Credit Union – IRA CD APY: 4.75%
- Consumers Credit Union – IRA CD APY: 4.88%
- Ally Bank – IRA CD APY: 4.50%
- Synchrony Bank – IRA CD APY: 4.60%
- Discover Bank – IRA CD APY: 4.50%
Alliant Credit Union
4.2
IRA CD APYs4.00% to 5.45%Terms OfferedThree months to five yearsMinimum Opening Deposit$1,000
Alliant Overview
Why we like Alliant’s IRA CD: Alliant Credit Union has traditional, simplified employee pension (SEP) and Roth IRA accounts with various investment options. Its traditional IRA CDs require a $1,000 minimum deposit and come in terms of three months to five years.
The one-year term offers the highest APY among our top picks for IRA CDs. The credit union’s jumbo IRA certificates, which require $75,000 minimum deposits, offer slightly higher APYs for terms of at least one year.
Alliant Credit Union is only online, but it has more accessible membership criteria than some traditional credit unions.
Alliant IRA CD Rates
Alliant Credit Union’s current IRA CD rates are:
- 3 months: 4.25% APY
- Jumbo 3 months: 4.25% APY
- 6 months: 4.75% APY
- Jumbo 6 months: 4.75% APY
- 12 months: 4.75% APY
- Jumbo 12 months: 4.80% APY
- 18 months: 4.40% APY
- Jumbo 18 months: 4.45% APY
- 2 years: 4.20% APY
- Jumbo 2 years: 4.30% APY
- 3 years: 4.05% APY
- Jumbo 3 years: 4.15% APY
- 4 years: 4.00% APY
- Jumbo 4 years: 4.05% APY
- 5 years: 4.00% APY
- Jumbo 5 years: 4.05% APY
Early Withdrawal Penalty
Alliant Credit Union’s early withdrawal penalties for CDs depend on the length of your term:
- Seven-day grace period: Equivalent of seven days’ interest, taken from the principal balance
- 17 months or less: Interest earned, up to 90 days’ worth
- 18 to 23 months: Interest earned, up to 120 days’ worth
- Two to four years or five years: Interest earned, up to 180 days’ worth
Consumers Credit Union
New or Used Car Loan
4.7
IRA CD APYs0.50% to 4.88%Terms Offered91 days to five yearsMinimum Opening Deposit$250
Consumers Overview
Why we like Consumer Credit Union’s IRA CDs: Investment options available from Consumers Credit Union (CCU) include traditional, SEP, Roth and education IRAs. The traditional IRA certificates require a low $250 minimum deposit and have term options of 91 days to five years. Its 13-month IRA CD term offers one of the highest rates among our picks.
CCU also has jumbo and super-jumbo IRA CDs with terms of 91 days to five years. They offer slightly higher rates for most terms, but their minimum balance requirements are much larger — $250 to $100,000 for jumbo accounts and $250 to $250,000 for super-jumbo accounts.
Unlike the other financial institutions we highlight here, CCU gives account holders the option of in-person service. It has 14 branches in northern Illinois and serves customers nationwide through more than 5,600 co-op branches.
Early Withdrawal Penalty
Consumers Credit Union has the following early withdrawal penalties for IRA CDs:
- One year or less: 60 days’ interest
- More than one year: 120 days’ interest
What To Watch Out For
There’s no online IRA CD application, so you must call CCU, visit a branch or submit your request through an online contact form. A representative will guide you through opening and funding the IRA CD.
Ally
4.6
IRA CD APYs3.00% to 5.00%Terms OfferedThree months to five yearsMinimum Opening Deposit$0
Ally Overview
Why we like Ally’s IRA CD: The online-only Ally Bank could be a good option for retirement savers since it offers both IRA CDs and IRA savings accounts. Ally doesn’t require a minimum deposit for IRA CDs, and it gives you the best rate it offers on the day you open or fund your CD. And when you renew your CD, you get a 10-day best-rate guarantee and a 0.05% loyalty reward added to your new interest rate.
You have two options for IRA CDs with Ally. Both are available as Roth, SEP or traditional IRAs.
- High-yield CDs: These offer the best APYs, and terms range from three months to five years.
- Raise Your Rate CDs: These are bump-up CDs that give you the chance to get one or two rate increases if the bank advertises better rates for your CD term after you open your account. Two- and four-year terms are available.
Ally IRA CD Rates
Ally Bank’s current IRA CD rates are:
- 3 months: 3.00% APY
- 6 months: 4.90% APY
- 9 months: 4.80% APY
- 12 months: 4.50% APY
- 18 months: 4.25% APY
- 3 years: 3.75% APY
- 5 years: 3.75% APY
Early Withdrawal Penalty
Here are Ally’s early withdrawal penalties by IRA CD term:
- Two years or less: 60 days’ interest
- 25 months to three years: 90 days’ interest
- 37 months to four years: 120 days’ interest
- More than four years: 150 days’ interest
Synchrony
4.6
IRA CD APYs0.25% to 5.15%Terms OfferedThree months to five yearsMinimum Opening Deposit$0
Synchrony Overview
Why we like Synchrony Bank’s IRA CDs: Synchrony Bank’s IRA CDs come with terms from three months to five years, and you can choose traditional or Roth IRAs. There’s no minimum deposit amount, so it’s one of the most flexible options on our list. The one-year term currently offers Synchrony’s highest APY, but you can get a slightly lower APY with the nine-month IRA CD.
If you’re looking for another way to save for retirement, consider this online bank’s IRA money market account.
Synchrony IRA CD Rates
Synchrony Bank’s current IRA CD rates are:
- 3 months: 0.25% APY
- 6 months: 4.40% APY
- 9 months: 4.80% APY
- 12 months: 4.60% APY
- 18 months: 4.25% APY
- 2 years: 4.00% APY
- 3 years: 4.15% APY
- 4 years: 4.00% APY
- 5 years: 4.00% APY
Early Withdrawal Penalty
Synchrony’s early withdrawal penalties by CD term are as follows:
- One year or less: 90 days’ simple interest
- More than one year but less than four years: 180 days’ simple interest
- Four years or more: 365 days’ simple interest
What To Watch Out For
You’ll need to call Synchrony to open an IRA CD. After you provide your information and ask any questions about the account, the bank will send paperwork for you to complete. You can make contributions and manage your account online once your IRA CD is open.
Discover
4.4
IRA CD APYs2.00% to 5.10%Terms OfferedThree months to 10 yearsMinimum Opening Deposit$2,500
Discover Overview
Why we like Discover’s IRA CDs: Although Discover Bank is best known for its credit cards, it also offers traditional and Roth IRA CDs and savings accounts with competitive APYs. The online bank also has the widest variety of term lengths among our picks for the best IRA CD rates, with options ranging from three months to 10 years. The 9 months term currently has Discover’s highest APY for an IRA CD, which is over twice the national average.
You can complete the entire application for your Discover IRA CD online. If you’re unable to sign the forms electronically, the bank will mail paperwork that you’ll sign to finalize the process.
Discover IRA CD Rates
Discover Bank’s current IRA CD rates are:
- 3 months: 2.00% APY
- 6 months: 4.10% APY
- 9 months: 4.40% APY
- 12 months: 4.60% APY
- 18 months: 4.25% APY
- 2 years: 4.00% APY
- 30 months: 3.75% APY
- 3 years: 3.75% APY
- 4 years: 3.60% APY
- 5 years: 3.60%APY
- 7 years: 3.60%APY
- 10 years: 3.60%APY
Early Withdrawal Penalty
Discover’s early withdrawal penalties for IRA CDs vary by term:
- Less than one year: Three months of simple interest
- One year to less than four years: Six months of simple interest
- Four years to less than five years: Nine months of simple interest
- Five years to less than seven years: 18 months of simple interest
- Seven to 10 years: 24 months of simple interest
What To Watch Out For
Compared to our other picks, Discover’s IRA CDs have the highest minimum opening deposit requirement — $2,500.
What Is an IRA CD?
An IRA CD is a time deposit account within an IRA. You usually make a deposit when you open your account. While you typically get a fixed interest rate for the entire term, some specialty CDs may allow you to get a higher rate at some point during the term.
IRA CD rates can vary based on factors such as the economy, the financial institution you choose, your account balance or your CD term. While you might earn more money with riskier investment choices such as stocks, an IRA CD offers stability, especially for older or more cautious investors.
There are many IRA CD terms available, so you can invest for the long term or just long enough to choose a different investment. Unlike many other investments, IRA CDs are typically protected by FDIC or NCUA insurance (up to $250,000 per depositor, ownership category and financial institution).
You generally won’t pay fees on IRA CDs. One potential exception is an early withdrawal penalty for removing funds from your account before the CD’s maturity date.
Pros and Cons of IRA CD Accounts
IRA CDs benefit people who want predictable earnings for their retirement savings. Plus, IRA CD rates can be more competitive than those for IRA money market and high-interest savings accounts. However, some drawbacks can make IRA CDs accounts less suitable for certain investors.
Pros
Guaranteed return and income stream: Fixed interest rates make calculating your return simple, and the ongoing payments can be helpful income during retirement.
Low-risk investment: IRA CDs’ low risk makes them especially appealing to investors closer to retirement age. Your IRA balance held in CDs won’t drop in value, so you’ll have security that many other IRA investments can’t offer.
Deposit insurance: IRA CDs at institutions that are NCUA- or FDIC-insured are safe from loss up to the $250,000 limit.
Tax perks: Depending on your financial situation, you might pick a tax-deferred traditional IRA CD to pay lower taxes now or a Roth IRA CD to reduce your tax burden during retirement.
Cons
Yearly contribution limits: The annual contribution limits for IRAs may be too low for your savings needs.
Potentially lower returns than alternatives: While your return is guaranteed with an IRA CD, it can fall short compared to securities such as mutual funds, stocks and bonds.
Potential penalties for early withdrawals: If you need to withdraw funds from your IRA CD before it matures or you reach age 59 ½, you may risk penalties from your financial institution or the IRS.
Traditional IRA CDs vs. Roth IRA CDs
IRAs come in multiple types with different tax advantages and regulations, eligibility rules and contribution limits. Common types of IRAs are traditional and Roth, both of which require earned income to contribute. Your type of IRA CD will need to match the type of IRA you have.
Traditional IRA CDs
With traditional IRA CDs, you can get a tax deduction for new contributions during the tax year you make them. If you have a qualifying financial situation — which depends on your filing status and modified adjusted gross income (MAGI) — you won’t pay taxes on these funds or your account earnings until you make withdrawals in retirement. This option can be appealing if you’re in a high tax bracket right now.
Roth IRA CDs
Roth IRA CDs allow you to invest after-tax income, but the contributions you make aren’t tax deductible. How much you can contribute depends on your filing status and your MAGI. If you qualify for a Roth IRA, qualifying withdrawals are tax-free when you’re retired. You might prefer a Roth IRA CD if you expect your tax rate in retirement to be high.
>> Related: Learn more about the different types of CDs
IRA CD Limits, Rules and Funding
The IRS regulates how and when you can contribute money to or withdraw it from Roth and traditional IRAs.
Contribution Limits and Withdrawal Rules
If you’re eligible, you can contribute toward both Roth and traditional IRA CDs. But IRS rules limit your total annual IRA contributions to $7,000 for 2024, plus another $1,000 if you’re at least 50 years old.
Withdrawing funds from IRA CDs before they mature can involve multiple costs. First, the financial institution can charge an early withdrawal fee that could be many months’ worth of interest. Second, if you take the money out of your IRA entirely before you’re at least 59 ½ years old, you might also pay a 10% early withdrawal tax penalty plus income taxes.
Options for Funding IRA CDs
Financial institutions may require a minimum deposit for your IRA CD. One option is to deposit new funds, keeping your yearly IRA contribution limit in mind. You can also move funds from an existing IRA account to a matching IRA CD type without concerns about contribution limits.
Alternatives to IRA CDs
Whether you can tolerate more risk, need a higher rate of return or just don’t want your money tied up, there are alternatives to IRA CDs you may want to consider.
IRA Savings Accounts
IRA savings accounts are low-risk investments — they usually have NCUA or FDIC insurance and require low opening deposits. Unlike IRA CDs, they allow you to add and move funds without waiting for a term to end. However, these accounts have variable APYs that might not beat IRA CD rates.
Having an IRA savings account may require a monthly maintenance fee, which a financial institution may waive if you meet certain requirements. While you avoid CDs’ early withdrawal penalties with this type of account, transfer limits and IRA tax penalties may still apply.
IRA Money Market Accounts
IRA money market accounts are similar to IRA savings accounts in terms of their flexibility, their variable rates and the fact that they don’t come with early withdrawal penalties. They’re also low risk when they’re FDIC- or NCUA-insured.
The main difference is that some IRA money market accounts let you write checks, which can be useful if you’re at retirement age and don’t face IRS penalties for early IRA withdrawals. You may need a minimum balance to get the bank’s highest money market rate.
Individual Bonds and Stocks
Over time, individual bonds and stocks could offer better returns than IRA CDs, savings accounts and money market accounts. You also get the flexibility to diversify and invest in different organizations. However, these investments require careful research since they’re riskier — there’s a potential for loss, and investments aren’t insured.
Bonds, which are loans to governments or companies, tend to be lower risk than stocks. They often offer ongoing interest payments for more predictability. Stocks, which are shares of a company, are more volatile, making your return harder to predict. Buying and selling these investments can also involve fees.
Mutual Funds and Exchange-Traded Funds
You can get mutual funds or exchange-traded funds (ETF) that consist of multiple investments. This lets you take advantage of potentially higher returns than an IRA CD with less risk than individual investments. You’ll also get the peace of mind that professionals manage these funds and you can sell your investments if needed.
Although the diversification helps, mutual funds and ETFs still involve more risk than IRA CDs. They don’t have guaranteed returns, and there’s no promise your investment won’t decline. Plus, you should consider the various fees for owning or trading funds.
Other Types of CDs
- 3-month CD rates
- 6-month CD rates
- 1-year CD rates
- 3-year CD rates
- 5-year CD rates
- Jumbo CD rates
The Bottom Line: Is an IRA CD Right for You?
An IRA CD can provide a guaranteed return and keep your retirement savings safe from loss. However, you should consider your financial needs to decide whether an IRA CD is right for you or another type of investment would work better.
To find the right IRA CD, look for competitive rates from credit unions and online banks and be sure to consider the tax benefits of different types of IRAs. For instance, you might prefer a short-term IRA CD so you can access funds sooner — maybe to use toward other investments — without paying an early withdrawal penalty.
FAQ: IRA CD Rates
The highest IRA CD rates, which can exceed 5% APY, tend to be from credit unions and online banks. The most competitive IRA CDs right now usually have terms of one year or less.
The interest rate for an IRA CD varies depending on the financial institution it’s from, along with factors such as the account balance and the length of the CD term. The highest IRA CD rates from credit unions and online banks are currently around 5% APY.
You might put your IRA funds in a CD to get a guaranteed return, avoid losing money and enjoy tax perks. However, it might not be a good choice if you don’t want your money tied up for a period of time or if you don’t want to miss out on the possibility of a better return with a different type of investment.
Methodology
Our team researched more than 100 of the country’s largest and most prominent financial institutions, collecting information on each provider’s account options, fees, rates, terms and customer experience. We then scored each firm based on the data points and metrics that matter most to potential customers. Read our full methodology.
- Savings and money market accounts (35% of total score): The best scores go to banks, loans and fintech companies with high interest rates and low or no fees or minimum opening deposits.
- Checking accounts (30% of total score): High marks are given to those with multiple accounts and minimal fees, plus benefits such as reward programs and mobile check deposit.
- Certificates of deposit (20% of total score): Top-rated financial institutions have low or no minimum opening deposits, as well as a variety of term options and specialty CDs for flexibility.
- Banking experience and access (15% of total score): Providers that excel in this category have large branch and ATM networks and multiple checking and savings accounts, and they earn more points for offering CDs and money market accounts.
All America Bank,Alliant Credit Union,Ally Bank, Amerant Bank, America First Credit Union, American Airlines Credit Union, American Express National Bank, Apple Bank, Arvest Bank, Associated Bank, Axos Bank, Banesco Bank,Bank of America, Bank of Hope, Bank Purely, Bank5 Connect,Barclays,Bask Bank, BECU (Boeing Employees Credit Union), Bethpage Federal Credit Union,BMO,BMO Alto Bank, Bread Savings (formerly Comenity Direct), BrioDirect,Capital One Bank, CFG Bank, Charles Schwab, Charlie Financial,Chase Bank, Chime, CIBC USA, CIT Bank,Citibank, Citizens,Citizens Bank, Colorado Federal Savings Bank, Comerica Bank,Connexus Credit Union, Consumers Credit Union, Credit One Bank, Cross River Bank, Current, Customers Bank, Delta Community Credit Union,Discover Bank, East West Bank, Emigrant Direct,EverBank (formerly TIAA Bank), Federal Savings Bank, Fifth Third Bank, First Citizens Bank, First Internet Bank (of Indiana), First National Bank of America, First Tech Federal Credit Union, FNBO Direct, Frost Bank, Golden 1 Credit Union, Heritage Bank NA, HSBC,Huntington Bank, KeyBank, Lafayette Federal Credit Union, Lake Michigan Credit Union,LendingClub, Limelight Bank, Live Oak Bank, Lonestar Bank, M.Y. Safra Bank, M&T Bank,Marcus by Goldman Sachs, Mercury Bank, Merrick Bank, Michigan State University Federal Credit Union,Milli, Morgan Stanley Private Bank, Mountain America Credit Union, My eBanc, MySavingsDirect, National Bank of Kansas City, Navy Federal Credit Union, NBKC Bank, North American Savings Bank (NASB), Northpointe Bank, Patelco Credit Union, PenFed Credit Union (Pentagon Federal),PNC Bank, Popular Direct, Presidential Bank, Provident Bank,Quontic Bank, Quorum Federal Credit Union, Randolph-Brooks Federal Credit Union, Regions Bank, Ridgewood Savings Bank, Rising Bank, Salem Five Direct, Sallie Mae Bank, Santander Bank, SchoolsFirst Federal Credit Union, Security Service Federal Credit Union, Service Credit Union,SoFi Bank, South State Bank, Spectrum Credit Union, Spring Bank, Star One Credit Union, State Bank of Texas, State Department Federal Credit Union, State Employees’ Credit Union, Suncoast Credit Union, Sutton Bank,Synchrony Bank, Synovus Bank,TD Bank, Texas Capital Bank, Third Federal Savings & Loan, Transportation Alliance Bank (TAB Bank),Truist Bank, U.S. Bank, UFB Direct, Umpqua Bank, Upgrade,USAA Bank, USAlliance Financial, Valley National Bank,Varo Bank, Vio Bank, VyStar Credit Union, Webbank, Webster Bank,Wells Fargo, Western State Bank, Zions Bank,Zynlo Bank
*Rates accurate as of September 4, 2024
**Data accurate at time of publication
Editor’s Note: Parts of this story were auto-populated using data from Curinos, a research firm that collects data from more than 3,600 banks and credit unions. For more details on how we compile daily rate data, check out our methodology here.
If you have feedback or questions about this article, please email the MarketWatch Guides team at [email protected].
