Build a CD Ladder Strategy
Calculate returns from a CD ladder — stagger maturity dates for regular access to funds while earning higher rates.
What Is a CD Ladder?
A CD ladder divides your investment across multiple CDs with staggered maturity dates. With $25,000 and a 5-rung ladder: invest $5,000 each in 1-year, 2-year, 3-year, 4-year, and 5-year CDs. Each year, one CD matures — giving you access to $5,000 while the rest continues earning. When a CD matures, reinvest it in a new 5-year CD to maintain the ladder. This balances higher long-term rates with regular access to funds.
CD Ladder vs High-Yield Savings
In normal rate environments, longer CDs pay more than savings accounts, making ladders worthwhile. In inverted yield curves (like 2023-2024), short-term rates may exceed long-term rates — making HYSA temporarily better. The advantage of a CD ladder: rate certainty. If rates drop, your locked-in CDs continue earning the original rate. A HYSA rate can drop at any time. The disadvantage: early withdrawal penalties ($25-100+ per CD) if you need funds before maturity.
The best time to build a CD ladder is when the yield curve is steep (long rates much higher than short rates). The worst time is when the curve is inverted (short rates higher). Check current rates at bankrate.com or depositaccounts.com before committing — rate environments change frequently.
