The best IRA CD rates for January 2021

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If you're looking for a safe investment opportunity, you can't get much safer than an IRA CD.

Here are the best IRA CD rates for January 2021

 Ally, Member FDICCapital One, Member FDICDiscover, Member FDICSynchrony, Member FDICAlliant, Federally Insured by the NCUA
Term length3 months – 5 years6 months – 5 years3 months – 10 years3 months – 5 years1 year – 5 years
APY0.20% – 0.85% APY0.20% – 0.40% APY0.20% – 0.60% APY0.15% – 0.80% APY0.50% – 0.65% APY
Minimum deposit$0$0$2,500$2,000$1,000
 Learn moreLearn moreLearn MoreLearn moreLearn more

IRA certificates of deposit let you invest your money with a guaranteed rate of return, which is a great option for people who are getting close to retirement age.

A good IRA CD should offer relatively high interest rates and a term length that matches your needs. It also shouldn't charge maintenance fees.

Below, you'll find our picks for best banks offering IRA CDs right now. We know "best" means something different for everyone, so we've listed each bank's strengths, as well as its limitations.

Keep reading to learn more about our top picks:

Ally IRA High Yield CD and Ally IRA Raise Your Rate CD

Ally IRA High Yield Certificate of Deposit (CD)

Ally Ally IRA High Yield Certificate of Deposit (CD)Ally Ally IRA Raise Your Rate Certificate of Deposit (CD)Capital One Capital One 360 IRA CD®Discover Discover IRA Certificate of Deposit (CD)Synchrony Synchrony IRA Certificate of Deposit (CD)Alliant Credit Union Alliant Credit Union IRA Certificate

APY
Min Deposit
Featured Reward
  • A five pointed star
  • A five pointed star
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  • 4.25 out of 5 Stars
    Editor's Rating
    APY

    0.50% – 0.65% APY

    Min Deposit

    $1,000

    Featured Reward

    NoneA five pointed star

  • A five pointed star
  • A five pointed star
  • A five pointed star
  • A five pointed star
  • 4.25 out of 5 Stars
    Editor's Rating
  • Details
  • Pros & Cons
    • Available as a Traditional, Roth, or SEP IRA
    • Terms ranging from 1 year to 5 years
    • Locks in rate for the duration of the term
    • Compounding interest to maximize earnings
    • Early withdrawal penalties are as follows: pay interest earned during the number of days the CD has been open, up to 90, 120, or 180 days
    Pros
    • Competitive APY
    • Traditional, Roth, or SEP IRA
    • No monthly service fees
    • 24/7 phone customer service
    • Low early withdrawal penalties
    • Mobile check deposit
    Cons
    • $1,000 opening deposit
    • No CD terms under 1 year

     

    Why it stands out: You can open a Traditional, Roth, or SEP IRA CD with Alliant. It's easier to become a member of Alliant than it is with many credit unions.

    Minimum opening deposit: $1,000

    Term options: Alliant term lengths range from 1 to 5 years.

    Penalties: When you withdraw funds from your IRA CD before it matures, Alliant charges you the interest earned for the number of days the account has been open, as follows:

    • Up to 90 days for terms of 12 to 17 months
    • Up to 120 days for terms of 18 to 23 months
    • Up to 180 days for terms of 24 months or more
    • 7 days during the 7-day grace period for new IRA CDs

    What to look out for: Term length. Alliant's shortest term is one year, so if you're looking for shorter-term IRA CDs, you may prefer a different institution.

    Other IRA CDs we considered and why they didn't make the cut:

    • Navy Federal Credit Union: Active and veteran members of the Navy and their families can earn high rates on their IRA CDs, but they must have at least $1,000 to open an account.(Member FDIC)
    • Air Force Federal Credit Union: Active Air Force members, veterans, and family members can earn respectable rates with AFFCU, but you'll need at least $1,000 to open an IRA CD, and at least $2,500 for a 5-year or 7-year term.
    • SchoolsFirst Credit Union: You'll earn a high APY with an opening deposit of only $500, but SchoolsFirst IRA CDs are limited to residents of Southern California.
    • VyStar Credit Union: This credit union provides solid rates for residents of certain parts of Florida and Georgia.
    • Connexus Credit Union: Connexus' rates are respectable, but it only compounds your interest once per quarter.
    • Signature Federal Credit Union IRA Certificate: Signature can be a good option if you want a credit union rather than a bank, but it compounds interest monthly, not daily.

    Frequently asked questions:

    Why trust our recommendations?

    Personal Finance Insider's mission is to help smart people make the best decisions with their money. We understand that "best" is often subjective, so in addition to highlighting the clear benefits of a financial product or account — a high APY, for example — we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don't have to.

    What is an IRA CD?

    An IRA CD is a type of retirement account that invests your funds in a certificate of deposit (CD). When you open a regular CD, your CD acts as a savings account — with an IRA CD, your CD acts as an investment account. 

    Most banks allow you to choose between a Traditional and Roth IRA CD, and some (such as Ally) offer SEP IRAs. An IRA CD follows most of the same rules as any other IRA. You're limited to a certain amount in contributions per year, and you'll pay the usual taxes and penalties for early withdrawals that you would with any other Traditional, Roth, or SEP IRA. 

    This means you'll contribute after-tax dollars to a Roth IRA CD, and you won't pay taxes when you withdraw money. For a Traditional IRA CD and SEP IRA CD, you'll typically contribute money before taxes are taken out, then pay income tax on withdrawals.

    Generally, your retirement savings strategy should change as you approach retirement. If you have a significant number of years left to invest, you'll likely want to take on more investing risk than an IRA CD can provide. If you're retiring in the next few years, however, an IRA CD can be a less-risky option for investing with a guaranteed rate of return.

    How did we choose our top IRA CD rates?

    Through our research, we've found that the best banks for IRA CDs pay high rates, offer a variety of IRA CD terms, and don't charge maintenance fees. 

    While interest rates are an important aspect of any online bank account, several offer the same annual percentage yields (APYs). To differentiate between them, we also considered minimum deposit and balance requirements, mobile apps, and other standout features. 

    We reviewed over a dozen institutions to identify the strongest options. We also cross-referenced our list against popular comparison sites like Bankrate and NerdWallet to make sure we didn't miss a thing. 

    What are the pros and cons of opening an IRA CD?

    Here are some pros of opening an IRA CD:

    • It's a good option if you are looking for a safe investment strategy
    • It may appeal to you if you're only a few years from retirement
    • You'll have the guaranteed rate of return that comes with CDs and the tax benefits that come with IRAs
    • You don't have to pay brokerage fees

    Here are the cons of opening an IRA CD:

    • It's not a good match for anyone wanting to take risks with investments
    • If you're young, you probably have time to take riskier investments that will earn you more in the long run
    • You're limited to how much you can contribute to an IRA annually
    • If you need access to the funds before the IRA matures, you could pay considerable penalties

    What are the penalties for withdrawing early from an IRA CD?

    Withdrawing early from an IRA CD can result in a double penalty.

    If you withdraw funds before your CD term ends, you'll pay the bank's early withdrawal penalties.

    If you withdraw money before age 59 1/2, you'll pay the usual 10% penalty you'd pay for early withdrawals from any type of IRA, as well as taxes. There are certain exceptions to this rule, and there are other things to take into consideration, such as whether you've had a Roth IRA for at least five years.

    If you withdraw before the CD term ends and before age 59 1/2, you'll pay both penalties.

    This post was reviewed and updated on December 29, 2020.

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