How to Compare IRA Interest Rates

By Nicki Howell

  • Overview

    Investing in an individual retirement account is a good strategy for retirement planning. With IRAs, you can choose a traditional IRA savings account or opt to earn higher yields with an IRA CD account. An IRA CD account requires that you invest your money for a set term. This term is usually between 12 and 60 months, and once your term is up, the money needs to be rolled into an IRA savings account or another IRA CD account to avoid penalties. But when choosing an account, it's important to find the best rate.

    • Step 1

      Check out IRA interest rates with local credit unions. Since credit unions are nonprofit, they often have better rates on IRA investments. You can shop credit union rates at Bank Rate (see Resources below). Refine the search by entering your zip code, which will allow you to search credit union IRA rates in your local area.

    • Step 2

      Check out community banks in your area. When comparing IRA rates, most individuals think about mainstream banks. However, community banks also offer excellent IRA rates. The only catch with community banks is you need to live or work in the local area to qualify for an account.

    • Step 3

      Compare IRA rates at online financial institutions. Without the cost of physical branches, online financial institutions can offer excellent IRA rates. Check out companies such as E-Trade (see Resources below), which regularly offer promotions on IRA accounts.

    • Step 4

      Consider locking in a rate with an IRA CD. With IRA CDs, the longer you invest your money, the more interest you earn. If you find a good rate, consider investing in a 60-month term.

    • Step 5

      Ask for a relationship reward on your IRA account. If you have a mortgage, checking and IRA account with your financial institution, they are motivated to keep your business. When comparing rates, ask them to match the best rate and give you an additional 25 to 50 cent percent bump on the interest rate.
    • Skill: Moderate
    • Tip: Set-up automatic deposits from your checking account. This can be achieved by contacting your financial institution and providing your IRA account information. Determine how much money you can set aside each month, and have that money deposited into your IRA account.
    • Warning:
    • Once you find the best IRA account, make sure the financial institution is insured. The Federal Deposit Insurance Corporation (FDIC) insures banks, and the National Credit Union Administration (NCUA) insures credit unions.

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