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People often associate individual retirement accounts with stock or bond investments. However, in the process of seeking the best investment, IRA account holders often overlook certificates of deposit more often than high-yield savings accounts or even checking accounts.
It’s easy to see why some holders ignore CDs and instead gravitate toward stock investments. For investors wary of putting their retirement funds in the sometimes volatile stock market, buying IRA CDs can be a source of safe returns.
What Are the Best IRA CD Rates Today?
CDs often deliver interest rates below 1%, but with a little research, you can find rates far exceeding that amount. Here are seven banks and credit unions that offer IRA CD rates of 4% or above:
- Alliant Credit Union: Up to APY; $1,000 minimum deposit
- Ally Bank: Up to APY; $0 minimum deposit
- America First Credit Union: Up to APY; $500 minimum earning balance
- Connexus Credit Union: Up to APY; $5,000 minimum deposit
- Discover® Bank, Member FDIC: Up to APY; $2,500 minimum deposit
- PenFed Credit Union: Up to APY; $1,000 minimum deposit
- Synchrony Bank: Up to APY; $0 minimum deposit
Alliant Credit Union
The Alliant Credit Union IRA certificate — the credit-union version of a CD — offers competitive rates regardless of terms or deposit amounts. Depositors earn up to APY. The credit union requires a minimum deposit of $1,000. Alliant offers terms between 12 and 60 months.
Why it stands out: The $1,000 minimum deposit should make it affordable to most depositors. Also, the maximum APY stands out over most competing CDs.
Ally Bank
As with most CDs, the Ally Bank IRA CD tends to offer higher rates for longer commitments, but these rates do decrease with Ally past a certain point. Ally’s IRA CD rates top out at APY for an 12-month term, while it offers terms between three and 60 months. Ally stands out by not requiring a minimum deposit.
Why it stands out: Along with not requiring a minimum deposit, Ally Bank offers high interest rates for relatively short commitments.
America First Credit Union
Membership in America First Credit Union is limited to residents of certain parts of Idaho, Nevada, Utah, Arizona and New Mexico. But eligible individuals can earn outstanding rates on CD terms of three to 60 months. CDs with terms of six to 11 months earn APY, and the minimum balance to earn interest is just $500.
Why it stands out: America First Credit Union’s CDs earn the best rate of any short-term CD in this roundup, and they beat most 12- and 18-month CD rates as well.
Connexus Credit Union
Connexus Credit Union offers excellent IRA certificate rates, and anyone can join. Although term choices are limited to 12 to 60 months, the rate for the 12-month CD is well worth the $5,000 minimum deposit: APY, which is one of the best rates on this list. The rate jumps to APY for a jumbo certificate, which requires a $100,000 minimum deposit.
Why it stands out: Anyone can join Connexus Credit Union to take advantage of the outstanding rates.
Discover Bank
The Discover® Bank IRA CD offers both short- and long-term CDs, from three months to 10 years. Those who opt for the 18-month term will receive the top APY of . Discover Bank requires a minimum deposit of $2,500.
Why it stands out: Depositors who commit to 12 months will earn a APY. Those who want to lock in a rate for 10 years will get a competitive APY.
PenFed Credit Union
Pentagon Federal Credit Union is America’s second largest, and you don’t have to be in the military or work for the Department of Defense to join. Members can open an IRA certificate with a $1,000 minimum deposit and earn up to APY. PenFed IRA certificates are available in terms of 12 months to seven years.
Why it stands out: PenFed IRA certificates earn competitive rates with a reasonable minimum deposit.
Synchrony Bank
The Synchrony Bank IRA CD is similar to its peers in many respects. It pays as little as for a three-month CD, but other terms offer higher APYs, depending on what you select. Rates top out at APY for a nine-month CD. Plus, there’s no deposit or minimum balance required, and terms are available up to five years.
Why it stands out: The IRA CD terms offer above-average rates. For example, the six-month CD rate is APY.
What Is an IRA CD?
An IRA CD is simply an individual retirement account that invests all of its funds in certificates of deposit. IRA holders can put some or all of their money in a CD, and some banks have CDs they designate specifically for retirement savings.
Is an IRA CD a Good Investment?
In times of low interest rates, IRA CDs for low-risk investors probably won’t provide the level of growth needed to fund your retirement. Even if you worry about stock market volatility, in most cases, you have little choice but to become a stock market investor on some level. However, rates have been on the rise over the past year, and they could increase further.
You probably don’t want to put all your retirement money into an IRA CD, but it’s fine to keep a portion of it in one. If you know you won’t need to touch the money for several years, it’s not a bad idea to put part of your IRA into a CD.
FAQ
If you're considering an IRA CD, it's important to learn how they work. These questions might resolve some of the confusion.
- What types of IRAs are eligible for CDs?
- All types of IRAs allow CDs as an investment option.
- Who do IRA CDs best serve?
- IRA CDs for low-risk investors are best suited for those who are near retirement and need to keep their funds safe but also want a higher level of return than a standard savings account.
- What is the contribution limit on an IRA CD?
- IRA CDs have the same contribution limits as other types of IRAs. For 2024, that contribution limit is $7,000 per year for everyone under 50 years old. Those who are 50 or older can contribute up to $8,000 per year, an extra $1,000 above the threshold.
Will Healy contributed to the reporting for this article.
Rates are subject to change; unless otherwise noted, rates are updated periodically. All other information on accounts is accurate as of March 5, 2024.
Rates may vary by region. To verify rates in your area, check the bank’s website for details.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
GOBankingRates is a personal finance and consumer interest rate website and an online marketing company serving top-tier banks, credit unions and other financial services organizations. Some companies mentioned in this article might be clients of GOBankingRates, which serves more than 100 national, local and online financial institutions. Rankings and roundups are completely objective, and no institution, client or otherwise, paid for inclusion or specific placement. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by the companies included in the article. All fees and rates are subject to change at the issuers’ discretion. Some interest rates might be short-term or promotional offers only, and it is possible additional terms and conditions must be met to obtain the interest rates listed. Rates and availability might vary by region. Verify terms and conditions before opening an account.
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