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The Best No-Penalty CD Rates in 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

CDs, or certificates of deposit, work under an easy-to-understand premise: You agree to place your money with a bank or credit union for a set amount of time, during which it will earn interest. At the end of the period, you get your money back plus a nice chunk of interest earnings. But if you withdraw money from your CD before the term expires — or before the CD “matures,” in financial parlance — the institution will charge you a penalty fee for breaking the terms of your agreement.

Generally depositors understand that they can’t touch their funds while they’re in the CD account. But the accounts below are special CDs that let customers withdraw money from a CD account with no penalty charge at whatever time they want. No-penalty CDs aren’t generally widespread, but we’ve selected the best of these accounts available nationwide, based on the following criteria:

  • An APY of at least 1.80%
  • No penalties for early withdrawal of funds
  • Available across the nation

The best no-penalty CD rates in April 2020

1. Marcus by Goldman Sachs®

TermAPYMinimum balance to earn the APY
7-month1.70%
$500
11-month1.60%
$500
13-month1.50%
$500

Marcus by Goldman Sachs stakes a strong claim to offering the best no-penalty CDs around, requiring a mere $500 deposit for customers to start earning solid APYs beginning at 1.50%. Interested customers should be aware, however, that like other no-penalty CDs on this list, the accounts offered by this bank lock in your money for seven days after you deposit. You can’t open a 7-month no-penalty CD on Monday and take out your money on Wednesday (if you needed to for whatever reason).

In addition, these accounts don’t allow any partial withdrawals of the principal. If you deposited $1,000 in an account and want to withdrawal money before that CD matures, you won’t be hit with any penalties — but you have to take out all $1,000 and your account will then be closed.

SEE DETAILS Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

2. CIT Bank

TermAPYMinimum balance to earn the APY
11-month 1.65%$1,000

If you have the $1,000 minimum deposit for this no-penalty CD account, CIT Bank will give you a rate of 1.65% APY on an 11-month term. While that’s not as much as you can earn with a comparable CD term with some of the options above, the deal offered by CIT could provide a decent alternative.

SEE DETAILS 

Member FDIC

3. Ally Bank

TermAPYMinimum balance to earn the APY
11 months1.40%Up to $5,000
11 months1.50%$5,000
11 months1.55%$25,000

Online-only bank Ally offers a single no-penalty CD account with an 11-month term that earns more APY depending on how much you deposit. Because it has a low minimum balance requirement, this account will attract consumers without a lot of money to spare who still want a no-penalty CD. Higher balances can earn better APYs.

Similar to all of the other products listed, this Ally no-penalty CD account makes you wait for the seventh day after the initial deposit to withdraw your funds, and the bank doesn’t allow for partial withdrawals. The bank also offers what it calls its 10 Day Best Rate Guarantee, promising that if depositors fund this CD within 10 days of opening it, Ally will make sure the account earns the highest rate available should the bank change its rate within that 10 day period. It’s by no means a game-changer, but a nice bonus to avoid feeling left out if you deposit a pile of money in your CD on Thursday, only to discover on Friday that Ally hiked its rates.

SEE DETAILS Secured

on Ally Bank’s secure website

Member FDIC

4. Citizens Access Liquid CD

TermAPY Minimum balance to earn the APY
11 months1.35%$5,000

Another no-penalty CD hails from online-only bank Citizens Access. This bank is backed by Citizens Bank N.A., which has roots dating back 190 years and has over $150 billion in assets.

Citizens Access calls its no-penalty CD a Liquid CD, but it functions in the same way as the other products on this list. It only offers one Liquid CD, which has an 11-month term and a current APY of 1.35%. There is a $5,000 minimum deposit required for this CD, and it features no penalty for a one-time withdrawal of its entire balance as soon as seven days after funding.

SEE DETAILS Secured

on Citizens Access’s secure website

Member FDIC

5. My eBanc

TermAPYMinimum balance to earn the APY
11-month1.10%$10,000
11 months1.20%$100,000

This Florida-based online savings bank may go by a somewhat generic name, but it’s a division of BAC Florida Bank, a financial institution with more than 45 years of history. The no-penalty CD offered here is called the Flex Time Deposit, and if customers who deposit at least $100,000 can earn an APY of 1.20%, which ranks at the top of the accounts on this list. Depositing at least $10,000 will earn you a decent APY of 1.10%.

Where this account truly shines is that it allows for two partial withdrawals of your funds without having to close your CD account entirely (as long as the balance still remains at $10,000 or more). All of the other no-penalty CD accounts on this list require you to withdrawal all of the principal and any interest earned.

SEE DETAILS Secured

on My eBanc’s secure website

Member FDIC

6. Investors eAccess

TermAPYMinimum balance to earn the APY
6-month1.15%$500

Another no-penalty CD requiring a minimal balance is the 6-month CD offered by Investors eAccess. This New Jersey bank provides one of the most competitive products when it comes to short-term CDs in the no-penalty category, but it does come with a few caveats.

First of all, there are no partial withdrawals allowed by this CD. If you need to take money out, you have to liquify the entire account. You’ll also receive your funds via paper check sent first class mail, so don’t expect an instantaneous turnover of funds should you want to make an early withdrawal. That said, the APY and low minimum account balance make this an excellent choice for short-term savings.

SEE DETAILS Secured

on Investors EAccess’s secure website

Member FDIC

7. PurePoint Financial

TermAPYMinimum balance to earn the APY
11-month1.01%$10,000
13-month0.95%$10,000
14-month0.90%$10,000

The online arm of Union Bank offers a great APY among the no-penalty CD accounts reviewed, which makes it a no-brainer — assuming you have the $10,000 needed for the minimum deposit. PurePoint’s sweet spot is the 11-month term no-penalty CD account, which offers an APY of 1.01%.

This no-penalty CD accounts come with the usual caveats — you can’t make any partial withdrawal of funds, and you have to wait seven days after your initial deposit before withdrawing. However, if you have the sizable chunk of change needed to open one of these accounts, you’ll earn some of the highest APY for your money.

SEE DETAILS Secured

on PurePoint Financial’s secure website

Member FDIC

8. Chartway Credit Union

TermAPYMinimum balance to earn the APY
12-month share certificate1.00%
$500

This credit union may be based in Virginia Beach, Va., but you can potentially become a member, so long as they meet one of the following conditions:

  • You reside or go to school or a place of worship in one of the areas served by a local branch of the credit union. Currently, Chartway Credit Union operates branches in the states of Florida, Texas, Utah and Virginia.
  • You have a family member who’s already a Chartway member
  • You or someone in your immediate family works at a company that utilizes Chartway’s financial services for its employees
  • You make a $10 donation to the We Promise Foundation, a charity founded by the credit union.

Once you’re a member, you can open a 12-month share certificate. Doing so requires a minimum deposit of $500, on which you’ll earn an APY of 1.00%. As with all the other no-penalty CD accounts listed, you can’t make a partial withdrawal of your funds — it’s all or nothing.

SEE DETAILS Secured

on Chartway Federal Credit Union’s secure website

NCUA Insured

9. Colorado Federal Savings Bank

TermAPY Minimum balance to earn the APY
11 months0.70%$5,000

Branchless bank Colorado Federal Savings Bank offers an array of financial products, including a number of certificates of deposit ranging from a 1-month to a 60-month. Among its CD offerings is a no-penalty CD that is worth highlighting.

The Colorado Federal Savings Bank features an 11 month no-penalty CD with an APY of 0.70%. This CD requires a minimum deposit of $5,000, with no maximum deposit limit. As a no-penalty CD, you’re able to withdraw the CD’s full balance – including interest and principal – with no penalty, seven days after you begin funding the account.

SEE DETAILS Secured

on Colorado Federal Savings Bank’s secure website

Member FDIC

What to watch out for with no-penalty CDs

Although no-penalty CDs, like any certificate of deposit, carries with it minimal risk of losing your principal, it’s important you thoroughly understand the terms of the account and understand what circumstances you can withdraw funds. Otherwise, your supposedly no-penalty CD will start devouring your funds with fees.

One of the biggest differences between no-penalty CDs lies with whether you can make partial withdrawals or if you have to withdraw the entire amount. If the account allows for partial withdrawals, make sure you understand if the bank or credit union considers a full withdrawal (and closure of the account) count toward your withdrawal limit. It’s easy to imagine a scenario where you skim the fine print, read a CD allows for two partial withdrawals, make those two withdrawals, then get hit with a penalty when you later try to close the account early because the bank considers that a “third” partial withdrawal.

Another concern you should have when shopping for no-penalty CDs is whether or not the bank or credit union will continue to offer it. AgFed Credit Union, for example, occasionally offers competitive no-penalty share certificates but they’re only available for funding for a limited time. If you snooze on some of these no-penalty CDs, don’t be surprised if they have vanished by the time you are ready to pull the trigger and fund one.

Learn more: Is a no-penalty CD worth it?

According to Ken Tumin, our in-house savings expert and founder of LendingTree-owned DepositAccounts.com, no-penalty CDs aren’t a bad option since there isn’t really much risk to trying one out. Just aim to find the longest term no-penalty CD deal you can since the rates will generally be higher.

“When the bank has your money for longer, they’ll usually offer a higher interest rate — and that interest will have more time to compound,” Tumin says. “So if you open a no-penalty CD, you should go for the one with the longest term possible. The rates will likely still be higher, and after all, if you decide to take the money out early, it’s no problem.”

Also, look for no-penalty CDs that offer the benefit on full withdrawals. Some banks only allow penalty-free partial withdrawals, Tumin warns.

Building a CD ladder to avoid withdrawal fees

If you’re interested in using CDs while still maintaining access to your funds, there’s another approach you could consider: building a CD ladder.

It’s can be a complicated strategy, but in short, you split your deposit up into smaller chunks and open several CDs with various term lengths. When the CDs reach maturity, you can renew the account and lengthen the term or withdraw the money if you need to. This way, you can take advantage of higher interest rates while still avoiding early withdrawal fees.

For a step-by-step guide to building a CD ladder, check out our guide linked above. And for even more savings strategies and tactics, keep your eye on the blog. We’re always reviewing the latest financial products and accounts to help you find the best solutions for your money.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Earning Interest

Top Jumbo CD Rates for April 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Conservative savers generally consider certificates of deposits (CDs) as sanctuaries where their money is kept safe and they enjoy a decent yield without stomaching the risk of investing in the stock market.

You agree to deposit your money in a bank or credit union for a fixed amount of time (which can be as short as a few months or as long as several years) and get the satisfaction of knowing your money is likely earning a higher annual percentage yield (APY) than it would in a checking or savings account.

Jumbo CDs, which in most cases require a minimum deposit of $100,000, have traditionally promised even higher APYs for customers than regular CDs. But a combination of unsettled interest rates and fierce competition among banks — both online and traditional — for the deposits of customers have given rise to many normal CDs that offer a better return than jumbo CDs.

It’s not entirely clear why banks haven’t been similarly aggressive in offering higher-yield jumbo CDs, but one possibility is that they are interested in attracting more customers rather than big money deposits. In other words, banks would rather have the business of 100 customers each depositing $5,000 CDs than 10 customers depositing $500,000 jumbo CDs.

Regular 1-Year CD vs 1-Year Jumbo CD

Institution

Capital One

My eBanc

CD Term

1 year

1 year

APY

1.50%

1.40%

Minimum Deposit Amount

$0

$100,000

SEE DETAILS Secured

on Capital One’s secure website

Member FDIC

Learn More

Regular 3-Year CD vs 3-Year Jumbo CD

Institution

MAC Federal Credit Union

Veridian Credit Union

CD Term

3 year

3 year

APY

1.45%

1.00%

Minimum Deposit Amount

$1,000

$100,000

SEE DETAILS Secured

on MAC Federal Credit Union’s secure website

NCUA Insured

Learn more

Regular 5-Year CD vs 5-Year Jumbo CD

Institution

Goldman Sachs Bank USA

KS StateBank

CD Term

5 year

5 year

APY

1.90%

1.45%

Minimum Deposit Amount

$500

$100,000

SEE DETAILS Secured

on Goldman Sachs Bank USA’s secure website

Member FDIC

Learn more

That said, if you feel the need to go big when it comes to your CD, then you likely won’t find better rates than the ones listed below.

The top jumbo CD rates of March 2020

To determine the best CDs for your jumbo-sized deposit, we turned to the database found on DepositAccounts.com, a website that like MagnifyMoney is also owned by LendingTree. For each common CD term, we assumed the customer was planning to deposit $100,000 in the account so as to include traditional jumbo CDs which typically have a higher minimum deposit needed to open. All the accounts included are also available nationwide.

You’ll notice as you read through the list of CDs we’ve selected, that some of them have minimum deposits of far less than $100,000. That’s because we’re focused on informing you of the best CD accounts for your money, and there are plenty of large minimum deposit CDs that still offer a great APY. You can rest assured we aren’t leaving out any good deals just because a financial institution’s marketing team decided not to call a CD “jumbo.”

Institution

CD Term

APY

Minimum Deposit Amount

Advancial3 months1.57%$20,000
Partner Colorado Credit Union6 months1.30%$100,000
Merrick Bank12 months1.87%$25,000
Merrick Bank18 months1.87%$25,000
NuVision FCU2-year0.92%$25,000
NuVision FCU3-year1.03%$25,000
Hiway FCU 4-year1.90%$25,000
Hiway FCU 5-year2.10%$25,000

As of March 4, 2020

Banks that offer the best jumbo CD rates

Advancial – 3-month CD, 1.57%APY

Advancial

Headquartered in Dallas, Advancial is a credit union that has roots dating back to 1937. While this credit union only has a handful of locations in Alaska, Texas, Oklahoma and Louisiana, membership is still open to anyone who joins Connex and pays a $5 fee.

Advancial offers a slew of CDs, including regular, IRA, business and jumbo iterations. Its 3-month junior jumbo CD is worth highlighting, with its 1.57% APY and minimum deposit of $25,000.

SEE DETAILS Secured

on Advancial’s secure website

NCUA Insured

Partner Colorado Credit Union – 6-month CD, 1.30% APY

Partner Colorado Credit Union
Despite its name, Partner Colorado Credit Union extends its membership to anyone who makes a $5 donation to the Partner Colorado Foundation. It offers an array of financial products and services, including regular, baby jumbo and jumbo certificates of deposit with varying term lengths.

Partner Colorado Credit Union’s standout product is its jumbo, 6-month CD. This CD boasts an APY of 1.30% and a minimum required balance of $100,000. It also has a baby jumbo 6-month CD offering, with a minimum required deposit of $25,000 and an APY of 1.15%.

SEE DETAILS Secured

on Partner Colorado Credit Union’s secure website

NCUA Insured

Merrick Bank — 12-month CD and 18-month CD, 1.87% APY

Merrick Bank

Based in Utah, Merrick Bank is an internet bank that was established in 1997. Merrick has carved out a business offering credit cards, personal loans and certificates of deposit.

You’ll need $25,000 to open the bank’s 12-month CD or 18-month, which both will earn you a generous APY of 1.87%.

SEE DETAILS Secured

on Merrick Bank’s secure website

Member FDIC

NuVision FCU – 2-year Certificate, 0.92% APY and 3-year Certificate, 1.03% APY

NuVision Federal Credit Union

NuVision Federal Credit Union is based in California, Arizona and Wyoming, but it offers its products nationwide. You can receive membership to this credit union by also joining the American Consumer Council.

NuVision offers a slew of certificates with varying term lengths, but its 2-year certificate steals the show with its 0.92% APY. This certificate requires a minimum deposit of $25,000, and dividends are compounded monthly. It also offers a 2-year certificate with a minimum of $50,000 and an APY of 0.97%, as well as a 2-year certificate with a minimum of $100,000 and an APY of 1.02%.

Its 3-year certificate also ranks as the best CD for a 3-year term length, too, with an APY of 1.03% with a minimum deposit of $25,000, an APY of 1.08% with a minimum deposit of $50,000 and an APY of 1.13% with a minimum deposit of $100,000.

SEE DETAILS Secured

on NuVision Federal Credit Union’s secure website

NCUA Insured

Hiway FCU – 4-year CD, 1.90% APY, 5-year CD, 2.10% APY

Hiway Federal Credit Union

Hiway FCU has a number of attractive financial products, and currently boasts the best rates for CDs with long term lengths. It offers an impressive 1.90% APY on its 48-59 month certificate for balances of at least $25,000, along with a 2.10% APY on its 60-month certificate for balances of at least $25,000.

Based in St. Paul, Minnesota, Hiway says it counts over 77,000 people as members. Membership to the credit union is open to anyone who joins the Minnesota Recreation and Park Foundation, as well as anyone who joins the Association of the U.S. Army.

SEE DETAILS Secured

on Hiway Federal Credit Union’s secure website

NCUA Insured

Go jumbo or stick to regular CDs?

To be considered “jumbo,” a CD needs to require a large minimum deposit, usually $100,000, as opposed to a normal CD which may not even require a minimum deposit. The deal banks made with well-off depositors boiled down to ‘if you leave lots of your money with us in this jumbo CD, we’ll give you a higher yield than if you deposited it in a normal CD.’

It’s important to note the differences between a jumbo CD and regular CD aren’t set in stone and have more to do with how the bank or credit union markets their savings products than any hard and fast rule, says Ken Tumin, founder of DepositAccounts.com, another LendingTree-owned site.

“I’ve seen banks and credit unions with jumbo CD minimums as low as $10,000 and as high as $250,000,” Tumin told MagnifyMoney. “Even if a bank doesn’t offer jumbo CDs with high minimums, someone could still deposit a large balance into a regular CD. They just wouldn’t be earning any higher interest than someone depositing a small balance.”

As the difference in earnings from a jumbo CD and traditional CD has diminished (or disappeared completely), the drawbacks of parking so much money in a CD become more apparent. For example, the jumbo CDs with the highest APY usually require a longer period of time to mature, which means you have at least $100,000 exposed to inflation—which means you possibly end up earning less than you expected.

Withdrawal penalties on jumbo CDs

According to a recent survey, the penalties for withdrawing your money from your CD early could be serious. Some banks will even take part of your principal as a penalty.

Below are the most common penalties, according to the survey:

  • 3 month CD: Three months of interest
  • 6 month CD: Three months of interest
  • 1 year CD: Six months of interest
  • 2 year CD: Six months of interest
  • 5 year CD: A year’s worth of interest

So, it’s important to be confident that you want to put your money in a CD. When you do this, you’re making an agreement with the bank to leave it there for a set period of time. If you’re unsure if you want to tie up your money for a long period of time, consider a high-yield savings account instead.

How jumbo CDs are taxed

It’s important to know that the interest you earn on your jumbo CD will be taxed as interest income, not as capital gains income.

This means that your bank or credit union will send you a 1099-INT form at the end of the year to show how much interest you earned in your jumbo CD and you will be taxed on that.

Are jumbo CDs safe?

According to the U.S. Securities and Exchange Commission: “Certificates of deposit are considered to be one of the safest savings options. A CD bought through a federally insured bank is insured up to $250,000.”

Some people prefer investing in the stock market over CDs because you can often get higher rates of returns; however, the stock market is a riskier bet, and returns are not guaranteed like those associated with CDs.

CDs are not affected by the whims of the stock market. The interest rate you agree on with your bank is the rate you will get. That interest rate, however, may not outpace inflation, meaning you may not really earn much, if anything, over time.

Final thoughts

If you have over $100,000 and want to invest it in a jumbo CD, you have several options. Like the chart above shows, you can choose many different terms and durations for your jumbo CD. Just be sure to research the bank you invest with so you know you’re putting your money with a top-rated institution. Also, be sure that you’re comfortable with putting your money in a CD long-term because there are often penalties for withdrawing your money early.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Best of

The Best IRA Savings Accounts

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Saving enough for retirement remains a daunting goal for many Americans. A 2018 survey by financial services company Northwestern Mutual found 41% of respondents worried about their retirement savings. Individual retirement accounts (IRAs) can help keep your blood pressure down by providing you with a powerful savings tool for retirement with significant tax advantages.

While you may associate IRAs with investing in stocks and bonds, one of the safest places to open an IRA is with a bank or credit union in the form of a savings or money market account. The list of IRA savings accounts below are the best for earning a high interest rate on your savings while keeping your future nest egg secure.

Top 10 IRA savings accounts of March 2020

Account

Minimum opening deposit

APY

Latino Community Credit Union IRA Share Account (Traditional, Roth, SEP)

$25

3.05%

Communitywide FCU IRA

$2,000

2.00%

Signature Federal Credit Union IRA Savings (Traditional, Roth, CESA)

$0

2.00%

TIAA Bank Yield Pledge Money Market IRA (Traditional, Roth)

$500

1.40%

Digital Credit Union Money Market IRA (Traditional Roth, SEP SIMPLE)

$0

0.85%

Ally Bank IRA Online Savings Account (Traditional, Roth, SEP)

$0

1.50%

Alliant Credit Union IRA Savings (Traditional, Roth, SEP)

$100

1.35%

Northpointe Bank IRA Ultimate Money Market

$1,000

1.05%

Bethpage Federal Credit Union IRA Money Market (Traditional, Roth)

$1

0.90%

Self-Help Federal Credit Union IRA Account (Traditional, Roth)

$100

0.70%

Latino Community Credit Union IRA Share Account —  3.05%, minimum deposit $25

This North Carolina credit union offers its banking products to anyone in the nation so long as they make a one-time $10 donation to the Latino Community Development Center, a nonprofit promoting financial literacy and general economic development “for low-income Latino and other immigrant communities in North Carolina,” according to its mission statement.

The credit union offers an IRA share account — their version of a savings account — with either a Traditional, Roth or SEP plan. The account requires a minimum deposit of $25 and currently earns an APY of 3.05%.

SEE DETAILS Secured

on Latino Credit Union’s secure website

NCUA Insured

Communitywide Federal Credit Union IRA — 2.00% APY, minimum deposit $2,000

Anyone can become a member of Communitywide FCU by joining the Michiana Goodwill Boosters or the Marine Corps League of St. Joseph Valley. Communitywide offers both traditional IRA and Roth IRA accounts, with a $2,000 deposit needed to open, with dividends paid into the account on a quarterly basis.

SEE DETAILS Secured

on Communitywide Federal Credit Union’s secure website

NCUA Insured

Signature Federal Credit Union IRA Savings — 2.00% APY, $0 minimum deposit

Membership in the American Consumer Council qualifies you to join up with this Virginia-based credit union, which offers Traditional, Roth and CESA IRAs. The barrier to funding these IRAs couldn’t be lower—there’s no minimum deposit required, meaning you could open an IRA savings account with the change you find under a couch cushion (though we recommend trying to save more for your retirement). The 2.00% APY should also entice you, as the interest earned starts to rapidly drop off the further you get down this list.

SEE DETAILS Secured

on Signature Federal Credit Union’s secure website

NCUA Insured

TIAA Bank Yield Pledge Money Market — APY 1.40%, minimum deposit $500

You might be more familiar with TIAA as an investment company, but it also operates a banking division based out of Islandia, N.Y. You can open an IRA within a Yield Pledge Money Market account at this bank with an APY of 1.40%. The only catch is that this rate applies for a term of one year; after that, it’ll drop back down to the normal rates (currently 0.90% – 1.35%, depending on your balance level). In addition, if you already have a Yield Pledge Money Market account or a Yield Pledge Checking account at TIAA, you can’t open this account with the same money. It’ll need to come from elsewhere.

SEE DETAILS Secured

on TIAA Bank’s secure website

Member FDIC

Digital Credit Union Money Market IRA – APY 0.85%, minimum deposit $0

The Digital Federal Credit Union is one of the largest credit unions nationwide, and membership is available to anyone who also becomes a member of Reach Out For Schools and pays its $10 fee. One hidden gem at this credit union is its Money Market IRA, which boasts an APY of 0.85% if you have a minimum daily balance of $100,000 or more. For balances between $1,000 and $25,000, however, you’ll earn an APY of 0.65%, and balances between $25,000 and $100,000 garner an APY of 0.75%. There is no minimum deposit required to open a Digital Credit Union Money Market IRA.

SEE DETAILS 

NCUA Insured

Ally Bank IRA Online Savings Account— 1.50% APY, $0 minimum deposit

Ally may be an online-only bank, but its history stretches back to the beginning of the 20th century as a financial institution that helped automaker General Motors finance sales. In its current iteration, Ally offers a wide range of competitive savings products, including an IRA account that earns an APY of 1.50%. Ally offers three different types of plans: Traditional, Roth and SEP, covering a variety of retirement needs while offering a high rate of return.

SEE DETAILS Secured

on Ally Bank’s secure website

Member FDIC

Alliant Credit Union IRA Savings— 1.35% APY, $100 minimum deposit

Although based in Illinois, it’s a simple matter for anyone in the country to join this credit union. A $10 donation to Foster Care to Success qualifies you for membership and the ability to take advantage of Alliant’s personal banking products, including their IRA Savings account.

Alliant offers three different plans for its IRA savings: Traditional, Roth and SEP. The APY is 1.35%.

SEE DETAILS Secured

on Alliant Credit Union’s secure website

NCUA Insured

Northpointe Bank Ultimate Money Market IRA — APY 1.05%, minimum deposit $1,000

Grand Rapids, Mich.-based Northpointe Bank operates a scattering of branches across the country, but primarily centered on the east coast. Although you can get started with its Ultimate Money Market IRA for as little as $1,000, you won’t earn as much: just 0.20% APY at this deposit level. Once you have at least $25,000 in the account, however, you’ll earn a higher rate of 1.05% APY. It’s generally not wise to keep over $250,000 in the bank because this is the limit of FDIC insurance, but if you choose to do so, balances over $1,000,000 in this account will dip back down to earning 0.50% APY.

SEE DETAILS 

Member FDIC

Bethpage Federal Credit Union IRA Money Market Account— 0.90% APY, $1 minimum deposit

A staple of the Northeast’s credit union industry, Bethpage opens its arms to anyone in the country who wants to become a member. All it requires is for you to open a $5 savings account with Bethpage and you’re in the club, meaning you’re also able to open an IRA money market account should you choose.

Bethpage FCU offers Traditional and Roth IRA plans with the account, which requires a minimum deposit of $1 to earn the full 0.90% APY. There’s no monthly fee associated with the account.

SEE DETAILS Secured

on Bethpage Federal Credit Union’s secure website

NCUA Insured

Self-Help Federal Credit Union IRA Account— 0.70% APY, $100 minimum deposit

A credit union with more than 27 branches and $1 billion in assets, Self-Help’s physical locations are scattered throughout California, Wisconsin, North Carolina and Florida. However, anyone in the country can sign up to bank with them online by joining the Center for Community Self-Help, which involves paying a one-time $5 fee.

The IRA account offered by Self-Help comes with an option to choose either a Traditional or Roth plan.

SEE DETAILS Secured

on Self-Help Federal Credit Union’s secure website

NCUA Insured

What’s the benefit of an IRA savings account?

Like any IRA account, an IRA savings account provides tax advantages to the saver. The exact benefits depend on the IRA plan or type you choose. While the two most common types of IRA offered are Traditional and Roth, more specialized versions of the account are also available, including:

  • Simplified Employee Pension (SEP): A type of IRA that can be used by either small business owners on behalf of their employees, or by self-employed individuals, the SEP IRA functions similar to a Traditional IRA — except it has a much higher annual contribution limit. You can contribute 25% of your annual compensation to the plan or $57,000 (whichever is the lesser), and like a Traditional IRA, those contributions are tax-deductible.
  • Savings Incentive Match Plan for Employees (SIMPLE): Another IRA tailored for small-business owners or those who are self-employed, SIMPLE plans allow you to put up to $13,500 of your business net earnings into the account, where the money remains tax-deferred until your start taking your withdrawals.
  • Coverdell Education Savings Account (CESA): This account aids with saving for education costs for those 18 years old or younger, but functions similar to a Roth IRA with more limits. For example, the beneficiary must be 18 years or younger when the account is set up (or be a special needs beneficiary), and you can make a maximum contribution of $2,000 per year. Only those with modified adjusted gross incomes of up to $110,000 ($220,000 if filing a joint return) may make a contribution to the account, and the contributions are not tax-deductible. The beneficiary can use the funds from the CESA for qualifying expenses toward their education.

How does an IRA savings account work?

You can contribute money to your IRA savings account anytime, just as you would with an ordinary savings account. However, because this is an IRA product, it’s still subject to a 2020 contribution amount limit of $6,000 (or $7,000 if you’re aged 50 or older), the same as an IRA account at a brokerage firm.

In that same vein, the penalties for withdrawing money early from your IRA remain in effect for the IRA savings account. Taking money from your Traditional IRA savings account incurs a 10% penalty if you’re younger than 59 1/2 years old (and assuming you don’t qualify for one of the special circumstances allowing a penalty-free withdrawal, such as a first-time home purchase).

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