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7 Best IRA CD Rates of 2020
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The best IRA CD rates tend to be at online banks. An IRA CD is generally an option to consider if you’re looking for solid, guaranteed returns on retirement funds. Unlike other types of investments, they don’t come with much risk.
Although IRA CDs provide guaranteed returns, stocks and other investment options can provide much higher yields. An IRA CD should, therefore, only make up a modest portion of anyone’s investment portfolio. In fact, if you’re a younger investor, you might wish to skip CDs entirely and allocate all of your IRA to higher-yielding choices like stock mutual funds.
The best IRA CD rates tend to be at online banks. An IRA CD is generally an option to consider if you’re looking for solid, guaranteed returns on retirement funds. Unlike other types of investments, they don’t come with much risk.
Although IRA CDs provide guaranteed returns, stocks and other investment options can provide much higher yields. An IRA CD should, therefore, only make up a modest portion of anyone’s investment portfolio. In fact, if you’re a younger investor, you might wish to skip CDs entirely and allocate all of your IRA to higher-yielding choices like stock mutual funds.
Summary of Best IRA CD Rates of 2020
| Bank | NerdWallet Rating | 1-year APY | 3-year APY | 5-year APY | Minimum Deposit | Learn More |
|---|---|---|---|---|---|---|
0.90% | 1.05% | 1.15% | $2,500 | Read review | ||
1.01% | 1.26% | 1.56% | $5,000 | Read review | ||
0.50% | 0.80% | 1.00% | $0 | Read review | ||
0.90% | 1.15% | 1.20% | $2,000 | Read review | ||
1.00% | 1.05% | 1.15% | $0 | Read review | ||
0.65% | 0.70% | 0.75% | $1,000 | Read review | ||
1.01% | 1.21% | 1.35% | $5,000 | Read review |
Discover Bank CD
1-year APY
With $2500 minimum balance
3-year APY
With $2500 minimum balance
5-year APY
With $2500 minimum balance
Minimum Balance
Member FDIC
Connexus Credit Union CD
1-year APY
With $5000 minimum balance
3-year APY
With $5000 minimum balance
5-year APY
With $5000 minimum balance
Minimum Balance
Federally insured by the NCUA
Capital One CD
1-year APY
With $0 minimum balance
3-year APY
With $0 minimum balance
5-year APY
With $0 minimum balance
Minimum Balance
Member FDIC
Synchrony Bank CD
1-year APY
With $2000 minimum balance
3-year APY
With $2000 minimum balance
5-year APY
With $2000 minimum balance
Minimum Balance
Member FDIC
Ally Bank CD
1-year APY
With $0 minimum balance
3-year APY
With $0 minimum balance
5-year APY
With $0 minimum balance
Minimum Balance
Member FDIC
Alliant Credit Union CD
1-year APY
With $1000 minimum balance
3-year APY
With $1000 minimum balance
5-year APY
With $1000 minimum balance
Minimum Balance
Federally insured by the NCUA
TIAA Bank CD
1-year APY
With $5000 minimum balance
3-year APY
With $5000 minimum balance
5-year APY
With $5000 minimum balance
Minimum Balance
Member FDIC
» Want to see more CD options? Check out our list of the best CD rates overall
Here are NerdWallet's picks for the best IRA CD rates:
Discover Bank: 0.25% - 1.15% APY, 3 months - 10 years, $2,500 minimum to open
Connexus Credit Union: 1.01% - 1.56% APY, 1 - 5 years, $5,000 minimum to open
Capital One: 0.25% - 1.00% APY, 6 months - 5 years, no minimum to open
Synchrony Bank: 0.25% - 1.20% APY, 3 months - 5 years, $2,000 minimum to open
Ally Bank: 0.50% - 1.15% APY, 3 months - 5 years, no minimum to open
Alliant Credit Union: 0.65% - 0.75% APY, 1 - 5 years, $1,000 minimum to open
TIAA Bank: 0.35% - 1.35% APY, 3 months - 5 years, $5,000 minimum to open
Last updated on July 1, 2020
Methodology
We featured easy-to-join financial institutions that we've reviewed with the highest CD rates available for CDs designated for IRAs. Higher rates might be available elsewhere.
To recap our selections...
NerdWallet's Best IRA CD Rates of 2020
Frequently asked questions
An IRA CD is a CD that serves as an investment in an individual retirement account plan. You can generally open an IRA plan at a bank or brokerage that holds multiple CDs or other interest-bearing accounts. An IRA is usually traditional or Roth, which have different tax implications.
(See more details about IRAs.)
A certificate of deposit, or CD, is a type of savings account that requires people to put money away for a set period of time. That’s called the "term length," and it generally ranges from three months to five years. Longer terms tend to earn higher returns.
An IRA, or individual retirement account, is a tax-advantaged account that can hold different types of investments, including stocks, bonds and CDs.
No. The Federal Reserve cut rates in March 2020, which encouraged banks and credit unions to lower their CD rates. Rates have fallen since then and will likely continue in that direction before they go up again. For more context, see our explainer on historical CD rates. You can also see how CDs compare to other low-risk investment options.
IRA CDs earn interest just like standard CDs. Rates are generally fixed and quoted as an annual percentage yield, or APY, which shows the amount an account earns in one year, including compound interest. The higher the APY, the more your money will grow.
» See what CDs can earn with our CD calculator
IRA CDs tend to be a decent option for people looking for guaranteed returns on their retirement savings, especially if retirement is only a few years away. These CDs are useful for those who can’t stomach the risks that come with stocks or bonds. Money in a CD is federally insured up to $250,000.
Younger investors can afford to take more risk with their investments, so they wouldn't want to tie up retirement funds in CDs only, if at all. Current CD rates don't compare to the return that investments can make in the long term. To check out higher-yielding options, see our list of best IRA accounts.
You can transfer money from another retirement account, such as an IRA or 401(k), or add new money. If you choose the second option, keep in mind that IRAs have annual contribution limits: $5,500 if you’re under 50 and $6,500 for those 50 or older. These are the combined limits for all IRAs you own.
You might face two penalties. Pulling money out of a CD before its term expires will likely result in an early withdrawal fee, which is typically a percentage of the interest earned. You could also face an IRS tax penalty.
This penalty could occur if you withdraw the money at the end of its term and deposit it into a non-retirement account without meeting a few requirements that qualify you for IRA distributions. For either a traditional or Roth IRA, you have to be older than 59 1/2, or you have to use the money for specific purchases, such as buying a home or funding higher education (see other exceptions). If it's a Roth IRA, you can withdraw your contributions at any time without an IRS penalty.
Generally, yes. Banks, especially those that don’t have investing accounts, may provide IRAs with limited choices. For example, a bank IRA might offer only CDs and money markets. IRAs at brokerages can hold a wider variety of investments, including stocks and bonds, which tend to provide higher returns over the long term.
