How today's CD rates compare
The FDIC's national average rates next to the Treasury yield for the same term, as of August 31, 2026. Rates vary widely between banks, and the Treasury yield is a useful yardstick for any offer.
| CD term | National average | Treasury yield | Interest on $10,000 at the average |
|---|---|---|---|
| 12-month | 1.73% | 4.16% | $173 |
| 60-month | 1.38% | 4.49% | $710 |
Sources: FDIC national rates (deposits under $100,000) and Federal Reserve H.15. Updated monthly in our CD Rate Gap Report.
What Is an IRA CD and How Much Does It Earn?
An IRA CD is a certificate of deposit held inside a retirement account — either a Traditional IRA or a Roth IRA. It combines the guaranteed, FDIC-insured return of a CD with the tax advantages of an IRA. The interest math is identical to any CD, so the calculator above works exactly the same way; what differs is how the money is taxed.
Here is what an IRA CD earns at an example rate of 4.50% APY (compounded daily):
| Deposit | Term | Interest Earned | Maturity Value |
|---|---|---|---|
| $7,000 | 1 year | $322 | $7,322 |
| $10,000 | 1 year | $460 | $10,460 |
| $10,000 | 5 years | $2,518 | $12,518 |
| $50,000 | 5 years | $12,589 | $62,589 |
The 2026 IRA contribution limit is $7,000 ($8,000 if you are 50 or older), which caps how much new money you can add to an IRA CD each year — though you can also fund one by transferring or rolling over existing IRA balances.
Traditional vs. Roth IRA CD: How Taxes Work
The CD itself is the same; the IRA wrapper determines the tax treatment.
Traditional IRA CD
- Contributions may be tax-deductible in the year you make them.
- Interest grows tax-deferred — you pay no tax each year on the interest.
- Withdrawals in retirement are taxed as ordinary income.
- Required Minimum Distributions (RMDs) begin at age 73.
Roth IRA CD
- Contributions are made with after-tax dollars (no deduction now).
- Interest grows completely tax-free.
- Qualified withdrawals in retirement are 100% tax-free.
- No RMDs during the original owner's lifetime.
The key advantage of an IRA CD over a regular CD: in a regular CD, you owe income tax on the interest every year, even before maturity. Inside an IRA, that interest compounds without an annual tax drag — a meaningful benefit over long terms.
When an IRA CD Makes Sense (and When It Doesn't)
An IRA CD is best suited for a specific type of saver:
- You are near or in retirement — and want a portion of your IRA in something with zero principal risk.
- You are very conservative — you prioritize guaranteed returns over the higher long-term growth potential of stocks.
- You want to avoid the annual tax on CD interest — the IRA wrapper shelters it.
The trade-offs to understand: Your money is locked by both the CD term and IRA rules. Withdrawing before age 59½ can trigger a 10% IRS early-withdrawal penalty on top of the bank's CD early-withdrawal penalty. And over decades, the modest ~4.5% return of a CD typically lags the long-run return of a diversified stock portfolio — so for younger savers with a long horizon, an IRA CD is usually too conservative for the bulk of retirement money.