5 Best IRA CDs (2024 Guide) (2024)

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
• Citibank
• Armed Forces Bank
• PNC Bank
• Discover Bank

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.

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).

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.

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.

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 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.”

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.

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.