Best IRA CDs

Grow your retirement savings with an IRA CD

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An individual retirement account certificate of deposit, also known as an IRA CD, is an excellent way to securely grow your retirement savings. IRA CDs offer a guaranteed fixed interest rate, so you know exactly what you’ll earn throughout your term. Additionally, IRA CDs may come with special tax advantages that aren’t offered by regular CDs.

IRA CDs are best suited to those who want to round out their retirement savings with low-risk, stable returns. Carefully evaluating the interest rates, fees and terms of various IRA CDs can help you maximize your retirement savings.

Compare top IRA certificates of deposit

To make our top picks for the best IRA CDs, we first considered more than 30 banks that offer certificates of deposit and narrowed those down to the ones that have IRA CD options. After that, we compared the choices based on variables including minimum opening deposits, fees, terms available and annual percentage yields (APYs).

Our picks may be Authorized Partners who compensate us. This does not affect our recommendations or evaluations but may affect the order in which companies appear.

Ally Bank
  • APY: 2% to 5%
  • Minimum deposit: $0
  • Terms available: Three months to five years

Ally Bank is an online-only bank founded in 2009. As an internet-based financial institution, Ally Bank eliminates the need for physical branches, allowing customers to manage their accounts from anywhere, at any time. Its products include an interest-bearing checking account, high-yield savings account, CDs, credit cards, auto loans, personal loans and more.

Ally Bank's IRA CDs give customers a variety of ways to save for retirement. These CDs are available as Roth, Simplified Employee Pension (SEP) and traditional IRAs, with terms ranging from three months to five years. Customers can enjoy competitive APYs ranging from 2% to 5% (as of publication), with no minimum deposit required.

The flexibility of Ally’s IRA CDs also makes them excellent for CD laddering, which allows you to take advantage of high interest rates while keeping some of your savings relatively accessible.

What we like
Ally Bank's IRA CDs offer:
  • Competitive APYs
  • Various term options
  • No minimum opening deposit
What to consider
Be aware of these factors:
  • Ally doesn’t have physical branches.
  • Its longest CD terms don’t have the highest APYs.
What reviewers say
Customers praise Ally Bank for its transparency, convenience, low fees and competitive interest rates. As B.H. of Totowa, New Jersey , stated: "Ally makes every online transaction easy to find and easy to complete. They consistently offer the best interest rates, as well as bonus rates for loyal customers.”

A number of the recent complaints center on technical issues with Ally’s platform and slow payments.

Citibank
  • APY: 0.05% to 4.6%
  • Minimum deposit: $250
  • Terms available: Three months to five years

Citibank is a leading global bank that provides a wide range of financial services to individuals and businesses. Founded in 1812, the bank has a rich history of innovation in the financial industry. Its diverse array of products includes savings and checking accounts, credit cards, loans, mortgages and retirement solutions.

One of Citibank's popular retirement solutions is its IRA fixed-rate CD. It has terms ranging from three months to five years and a $250 minimum deposit. Citibank provides a CD upgrade option for account holders over age 59½, allowing them to bump up their IRA CD rate once a year.

You can’t open a Citibank IRA CD online, so you must visit a branch, call customer service or mail in an application instead. In addition, not all of Citibank’s IRA CD terms have competitive yields. For example, four-, five-, seven-, eight- and 10-month terms all earn a 0.05% APY, compared with three- and six-month terms, which earn 4.6% APY (as of publication).

What we like
With a Citibank IRA CD, you’ll get:
  • Competitive APYs on select terms
  • Various term options
  • Low minimum deposit
  • Annual rate bump for those over age 59½
What to consider
Watch out for these drawbacks:
  • IRA CDs can’t be opened online.
  • Some terms have low interest rates.
  • It’s difficult to find IRA CD information on Citibank’s website.
What reviewers say
While some customers have had negative experiences with Citibank's fees and account management practices, many customers seem satisfied with the bank's services overall.

For instance, Tarun from Philadelphia wrote : “The convenience that Citibank offers is unparalleled to other banks. The savings interest rate has been competitive during such challenging times.” Anberitha from Columbus, Mississippi , mentioned how pleased they were with Citibank’s helpfulness and responsiveness, saying: “I’ve only been with Citibank for a short time, but I have been pleased with the customer service. I normally use the app or website to get service, but I have on occasion called in to get assistance. They are all very responsive and helpful."

Armed Forces Bank
  • APY: 1% to 4.58%
  • Minimum deposit: $500
  • Terms available: 30 days to five years

Armed Forces Bank puts a special focus on serving the unique needs of military personnel. The bank’s branches are located exclusively on military bases around the U.S., providing access to services such as checking and savings accounts, personal loans and credit cards.

The bank’s IRA CD comes with a 30-day to five-year term and requires a $500 minimum deposit. Armed Forces Bank has more IRA CD term options than most banks. However, interest compounds quarterly instead of monthly for IRA CD terms 12 months or longer. An infrequent compounding rate can significantly lower your overall return, depending on your term length and deposit amount.

To open an IRA CD, customers must visit a branch, as the bank does not offer online account opening. Because all branch locations are on military bases, Armed Forces Bank is best suited to active and retired military members and those who have base access.

What we like
Armed Forces Bank’s IRA CDs come with:
  • Competitive APYs
  • Various term options
  • $500 minimum deposit
  • Convenience for military members
What to consider
If you’re thinking about an Armed Forces Bank IRA CD, consider the following:
  • IRA CDs must be opened at a branch.
  • Branches are on military bases.
  • Interest compounds quarterly for most IRA CD terms.
What reviewers say
Many customers appreciate Armed Forces Bank and the focus it puts on serving military personnel and their families. Some customers have been with the bank for many years and have always had a positive banking experience, even when stationed overseas.

As one customer, William from Macomb, Michigan , said: “My family and I have been with the AFB for 53 years this June. We have NEVER experienced any type of negative banking services. I have [served] overseas nine times, from Vietnam, Germany, Saudi [Arabia], Japan, Korea and six different states and never had any type of issue.”

PNC Bank
  • APY: 0.01% to 4.05% (varies by location)
  • Minimum deposit: $250
  • Terms available: Six months to 10 years

With a history dating back over 170 years, PNC Bank has become a trusted partner to millions of customers across the U.S. PNC Bank operates numerous branches across 29 states, providing customers with convenient access to their accounts and a range of financial products.

Among the many products offered by PNC Bank are its IRA CDs. These CDs require a minimum deposit of $250 and have terms ranging from six months to 10 years. You must open your CD in person at a PNC Bank branch.

Although PNC might be a good option if you’re looking for a secure way to save for retirement, only its promotional IRA CDs earn competitive APYs, which top out at 4.05% (as of publication). The rest of its IRA CDs earn 0.01% to 0.03%, depending on your balance.

What we like
PNC Bank IRA CDs provide:
  • Low minimum deposit
  • Various term options
  • Competitive yields for promotional IRA CDs
  • Branch access
What to consider
Make sure to pay attention to these factors:
  • CDs must be opened at a branch location.
  • APYs may vary by location.
  • Nonpromotional CDs have low APYs.
What reviewers say
While some customers have made negative remarks about PNC’s fees, many seem to appreciate the bank's range of products and services and its focus on convenience. Others have noted that it’s a great choice if you’re looking for a bank that still has physical branches.

Jarvia from Los Angeles had this to say: "The associates, online and in-branch, are warm, professional, knowledgeable, helpful and courteous. Their products are exactly as advertised, and banking is easy and convenient. For those of us who physically bank, their locations and hours are convenient and easily accessible."

Discover Bank
  • APY: 2% to 4.75%
  • Minimum deposit: $2,500
  • Terms available: Three months to 10 years

With a focus on simplicity and transparency, Discover Bank has become a popular choice for those who want to manage their finances online. It offers a range of financial products and services, including online savings accounts, credit cards, personal loans and IRA CDs.

Discover Bank’s IRA CDs allow individuals to save for retirement while earning a competitive APY. Although there’s a minimum opening deposit of $2,500, you can open an account entirely online, unlike with most of the other IRA CD options on this list.

Depending on the term you choose, you can earn an APY of up to 4.75% (as of publication), which is among the highest rates offered by any bank. Additionally, Discover Bank's IRA CDs offer flexible terms ranging from three months to 10 years, allowing you to choose the time horizon that works best for your retirement savings goals.

What we like
Discover Bank CDs feature:
  • Competitive APYs
  • Various term options
  • Online application
What to consider
Be aware of these factors:
  • You need to make a $2,500 minimum deposit.
  • There are no physical branches.
  • The longest IRA CD terms don’t have the highest APYs.
What reviewers say
Discover is perhaps best known for its credit cards, so it’s no surprise that many of its glowing reviews are about its rewards and cash-back programs. However, several customer reviews note just how helpful customer service is and how pleasant it is to bank with the institution overall. One customer, Joseph from North Providence, Rhode Island , noted, “Customer service always helpful, friendly and quick to resolve any issues and/or answer any questions."

What is an IRA certificate of deposit?

An IRA CD, or individual retirement account certificate of deposit, is a type of account that’s designed specifically for retirement savings.

It's similar to a traditional CD in that you deposit money for a fixed period of time, known as a term, and earn a guaranteed interest rate. However, with an IRA CD, the money you deposit is earmarked for your retirement and may come with special tax advantages.

There are two main types of IRA CDs: traditional and Roth.

  • With a traditional IRA CD, you may be able to deduct your contributions from your taxable income, but you'll pay taxes on the CD’s funds when you withdraw them in retirement.
  • With a Roth IRA CD, you contribute after-tax dollars, but you can withdraw the money tax-free in retirement.

The terms for an IRA CD can range from about a month to 10 years. Generally, the longer the term, the higher the interest rate you’ll typically earn. But this isn’t always the case. Some of the best IRA CD rates might be for terms ranging from one to three years.

» MORE: CDs vs. savings accounts: Which is right for you?

Pros and cons of IRA CDs

While IRA CDs have their advantages, it's important to weigh them against the potential drawbacks before deciding if one is right for you.

“An IRA CD can be a good option for conservative investors, retirees and individuals with specific savings goals,” said Levon L. Galstyan, a certified public accountant at Oak View Law Group in Auburn, California. “However, if you want high returns, flexibility or may need to access your money before the maturity date, an IRA CD may not be the best choice for you.”

Pros

  • Guaranteed returns: IRA CDs typically offer fixed interest rates, so you know exactly how much you'll earn.
  • Low risk: The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) insure most IRA CDs, which means you get your money back from bank losses up to certain limits.
  • Tax advantages: IRA CDs can provide tax advantages when you either deposit money into the CD or when you withdraw funds in retirement, depending on the IRA type you choose.
  • Diversification: IRA CDs can be a valuable part of a diversified retirement savings plan, helping to balance out riskier investments.

Cons

  • Limited liquidity: You may be subject to early withdrawal fees and IRS penalties if you need to withdraw funds before your IRA CD matures.
  • Low returns: While their returns are guaranteed, IRA CDs don’t offer the highest possible rate of return compared with other investment options.
  • Limited flexibility: Once you've chosen the term of the CD, you can't change it.
  • Opportunity cost: By tying up your money in a low-return IRA CD, you may miss out on potentially higher returns from other investment options.

How to choose an IRA CD

When choosing the best IRA CD for your retirement savings, consider the following factors:

  • Determine your goals. Consider how an IRA CD fits into your overall retirement savings plan. For example, shorter-term IRA CDs may make sense if you’re retiring soon and will need the money, while longer-term CDs may make more sense if you have a broader time horizon.
  • Decide on your minimum deposit. IRA CDs typically require a minimum deposit, which can range from a couple hundred dollars to several thousand dollars. Consider your available funds and choose an IRA CD with a minimum deposit that fits your budget.
  • Compare interest rates. Choosing an IRA CD with a competitive APY will help you maximize your retirement earnings.
  • Consider the term length. IRA CDs come with a set term length, which can range from several months to several years. Generally, the longer the term, the higher the interest rate. However, if you need access to your funds soon, a shorter term may be more appropriate.
  • Check for early withdrawal penalties. CDs typically have penalties for early withdrawal, so make sure you understand the terms and fees associated with withdrawing your money before the CD matures. Withdrawing from an IRA before age 59½ is usually subject to IRS penalties as well.
  • See if you can open an account online. Many IRA CDs can only be opened in person at a local branch. If you don’t have a local branch in your area, consider opening an account through Ally Bank or Discover Bank.
  • Look for insurance. Make sure the IRA CD you choose is insured by the FDIC or the NCUA. This will protect up to $250,000 of your funds if the IRA CD’s issuing bank or credit union fails.
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Alternatives to IRA CDs

In most cases, an IRA CD shouldn’t make up your entire retirement savings plan. You might want to round it out with some of these IRA CD alternatives:

  • Stocks: Investing in individual stocks or stock funds can provide the potential for higher returns than an IRA CD. However, stocks also come with greater risks.
  • Bonds: Bonds are generally less risky than stocks, but they also have lower potential returns.
  • Mutual funds: Mutual funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds or other assets. They offer a convenient way to diversify investments without having to research individual stocks or bonds.
  • Exchange-traded funds (ETFs): ETFs are similar to mutual funds but trade on stock exchanges like individual stocks. They are a low-cost way to get exposure to a broad range of stocks or bonds.

» MORE: Best online savings accounts

Bottom line

IRA CDs can be a great option for those looking to save for retirement, as they offer guaranteed returns and typically offer tax advantages. Because they’re low-risk investments, they’re a good way to protect your savings.

However, IRA CDs may not offer the highest returns compared with other investment options. So while it’s okay to include them as part of a diversified retirement savings plan, they shouldn’t be your only strategy. Considering other investment options can help ensure you meet your long-term financial goals.


Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
  1. IRS, “ Traditional IRAs .” Accessed Feb. 24, 2023.
  2. IRS, “ What if I withdraw money from my IRA? ” Accessed Feb. 24, 2023.
  3. IRS, “ IRA FAQs .” Accessed Feb. 24, 2023.
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