Types of IRAs: Money Markets & CDs

Money market rates and bank CD rates are competitive, but which IRA is right for you?

Individual retirement accounts (IRAs) are a great way to save money for your future. It's a common misperception that all of the funds in an IRA are invested in the stock market. In fact, there are many types of IRAs, including stocks, bonds, cash, savings accounts, money market accounts and CDs. Using a CD or money market as an IRA, in particular, can be a good idea as both carry low risk and high interest rates.

To choose between the two, you should start by considering the difference between the IRA money market rates and the IRA bank CD rates. You should consider your savings goals, how much access you'll need to the funds and how long you plan to save. Review the differences between these two types of IRAs to determine whether having a money market as an IRA or a CD as an IRA is right for you.

IRA money market account rates & overview

One of the main reasons to choose this type of retirement savings is because money market rates may be higher than regular savings accounts rates. Having a money market as an IRA will help you earn a competitive amount of interest while ensuring your money is FDIC-insured (up to $250,000). That's a guarantee you won't get with stocks.

The biggest difference between having a money market as part of your IRA and having an IRA CD is that with a money market account, you are able to deposit additional funds and you may be able to withdraw money a limited amount of times during the month.

IRA bank CD rates & overview

IRA CDs offer an even higher interest rate than traditional savings accounts and money market accounts. Unlike money market IRAs, however, IRA CDs require you to commit to an investment term between six and 60 months. Additionally, just as with traditional CDs, the longer the term, the higher the interest rate.

Savings goals - not just money market and bank CD rates - should determine your choice

Once you've considered the types of IRAs available, be sure to consider your savings goals and lifestyle needs. For example, if you will be regularly contributing to and withdrawing from the savings, a money market as an IRA may be right for you. Instead, if you want to commit to a longer savings plan and can pretty safely conclude that you won't need these funds soon, an IRA CD may be the better option. For more information, contact Citizens Bank Retirement Services at 1-888-948-7200.


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