How to Compare IRA Rates

There's no reason why you shouldn't get the best rate on an IRA certificate of deposit, particularly with all of the information on the Internet at your fingertips. Comparing interest rates is the smart way to get the highest return on your money, and IRA CDs are safe, FDIC-insured investments that can help supplement your current retirement and 401(k) savings.

Difficulty:

Moderately Easy

Instructions

1. Determine the term of your IRA CD. Some people prefer shorter time periods when it comes to investments, such as six-month certificates of deposit, while others enjoy the sometimes-higher rates of three- or five-year CDs. Use your discretion and think ahead to figure if you'll need to withdraw the money for a certain purchase in the future.

2. Make a list of local banks. Most communities and towns have a number of banks and/or financial institutions within a reasonable distance. Create a list of the banks nearest you and start making phone calls to inquire about their current rates for IRA CDs. Interest rate and APY (annual percentage yield) data can vary widely from bank to bank, which is why it's important to shop around for the best rates on an IRA CD with the term of your choice. As you gather information, write down the rates so you can compare them later.

3. Compare IRA CD rates through bank websites. Rate information customized to the rates available in your particular area can be found in a central location on many banks' websites. For example, go to the website of a major bank, such as Wachovia, and click on the link for "Savings and CDs." The following page will prompt you to enter your ZIP code to provide personalized interest rates for the bank's products, including IRA CDs. As you go from website to website, print out or write down the rates that you find appealing.

4. Check Internet banks too. There are a number of banks that only conduct business online (or sometimes, also by phone). And because of their lower operating costs, they can offer interest rates on IRA CDs that may be substantially higher than those offered by regular brick-and-mortar institutions.

Tips & Warnings

• Banks sometimes change interest rates on a daily basis, so if you find an interest rate on an IRA CD that you'd like to lock in, be sure to either call or visit the bank to open the account that day if possible.

• IRA CDs are only FDIC insured up to a certain dollar amount, so check with the bank before opening an account.

References

• EverBank: Online Banking Information

Resources

• Read this Article in Spanish
• Bankrate: Compare CDs & Investment Rates