These investment accounts offer tax-free income when you retire. Of course, any return you get in a Roth IRA depends on the investments you make in it, but historically these accounts have achieved, on average, a return of between 7 and 10%. If you don't like surprises and want to know exactly how much interest the investment will generate, a CD with a fixed-rate IRA gives you that certainty. IRA rates vary depending on the underlying investments, which in the case of an IRA CD are a certificate of deposit.
IRA CD rates can offer a great way to increase your retirement savings, but it's essential to understand how they work before investing. A CD IRA is an individual retirement account in which your money is deposited in a certificate of deposit, a fixed-term deposit account that pays interest at a fixed rate in exchange for the saver agreeing to deposit cash for a certain period of time. Some banks may offer more competitive rates for five-year IRA CDs, for example, but not for six-month IRA CDs.