Interest

• One of the biggest advantages to an IRA CD is that it offers a higher interest rate than most savings plans.
  
  

Low Risk

• Since most IRA CDs are FDIC insured, the risk is minimal.
  
  

Tax Deferred

• An IRA CD is tax-deferred, which means you don't pay any taxes on your deposit, capital gains or interest until the term is up, unlike a non-IRA CD.
  
  

Minimum Deposit

• One disadvantage is that a minimum deposit, often as much as $1000, is required to open an IRA CD.
  
  

Terms

• There is little flexibility with an IRA CD. The fixed-rate, fixed-deposit plan requires a term limit, typically six months to five years. The longer the term, the higher the interest rate will be. You will be penalized if you withdraw early. If you need your money liquid, an IRA CD may not be right for you. Or consider opting for a shorter term, but keep in mind that the interest rate will be lower.