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Tips to Compare IRA CD Rates

Omkar Phatak May 10, 2019
The IRA facility is one such initiative of the US government to encourage retirement saving. Here are some tips to compare IRA CD rates.
Of the many investment and savings options available, Individual Retirement Account (IRA) certificates of deposit are some of the safest ones. If you are beginning to think about retirement planning, you must consider investing in IRA CD, as it has guaranteed returns. 
However, for the best returns, you should be able to make compare and choose the best rates. People who live comfortably in their retirement years, are the ones who invest wisely in their active years. Read ahead to know more about it as we enlist a few suggestions to compare IRA CD rates.

What is an IRA CD?

✓ An IRA CD is an investment made using the money deposited in an IRA.
✓ An Individual Retirement Account (IRA) is a special kind of retirement savings account controlled by the Internal Revenue Service (IRS). The money invested in an IRA is protected from taxation or rather exempted from it.

✓ There are IRA contribution limits set by the IRS which decides the maximum amount of money that can be contributed to an IRA every year.
✓ The money invested is only taxed after it is withdrawn.

✓ There are many types of IRAs. Some of the most prominently used ones are Roth IRA and Traditional IRA.

✓ A certificate of deposit is one of the safest investments you can ever make.
✓ It is a time deposit investment that yields a return after a fixed period of time, according to a fixed or variable interest rate.

✓ The sum of money cannot be withdrawn until the fixed period of time is over.
✓ Thus, an IRA is basically a savings account and one can create certificates of deposit using the money invested in it. An IRA CD is created by using the money invested in the IRA.

How to Compare IRA CD Rates?

✓ It is safe and vital to invest in IRA CDs, because most banks and credit unions that offer this facility, guarantee higher returns on them, compared to conventional certificates of deposit.

✓ Another reason why one should opt for them is because they are insured and protected by banks and credit unions.
✓ There are regulatory bodies like Federal Deposit Insurance Corporation (FDIC) that oversee the IRA CD affairs, which make them some of the most protected investments.

Some factors for CD rates comparison are enlisted ahead:

Higher is Better

Obviously, higher the interest rate (Annual Percentage Yield) offered on an IRA CD, the better it is for you. Some banks offer a fixed interest rate or a variable one. Fixed rates should be preferred.

Longer Maturity Periods Are Better

When it comes to IRA CDs, go for the highest interest rates offered and also the ones with a long maturity period. That way, you can reap maximum profit from the invested money, which anyway, you are not going to be able to withdraw for quite some time.

Earnings Estimate & Maximum Investment Limit

Look at the earnings potential provided by the bank or credit union. Also check out the maximum investment limit. In both cases, higher is better. Make sure that the investment is FDIC ensured.
Smart investments made today, will leave you less things to worry about in your retirement age. So, invest wisely and hold on to your money for good through IRA CD investments.