The CD ladder calculator helps you build a certificate of deposit ladder strategy. Split your investment across multiple CDs with staggered maturities to earn higher long-term rates while maintaining regular liquidity as each CD matures.
How to Build a CD Ladder
A CD ladder solves the tradeoff between earning higher long-term CD rates and needing flexibility. Instead of putting everything in a 5-year CD, you spread across 5 CDs maturing in years 1, 2, 3, 4, and 5. When the 1-year CD matures, reinvest in a new 5-year CD. Soon all your CDs are earning 5-year rates, but one matures every year.
Step-by-Step Process
1. Decide your total investment and number of rungs (5 is common). 2. Divide evenly — $25,000 with 5 rungs = $5,000 per CD. 3. Buy CDs maturing at 1, 2, 3, 4, and 5 years. 4. When each matures, reinvest in a new longest-term CD (5-year). 5. After 5 years, all CDs are 5-year CDs with one maturing annually.
FAQ
What is a CD ladder?
A CD ladder splits your investment across multiple CDs with different maturity dates. As each CD matures, you reinvest at the longest term. This provides regular liquidity while earning higher long-term CD rates, avoiding the risk of locking everything into one long-term CD.
How many rungs should my CD ladder have?
Most CD ladders have 3-5 rungs. A 5-rung annual ladder means one CD matures every year for 5 years. More rungs provide more frequent access to cash but add complexity. For short-term ladders, 3-month or 6-month increments work well.
Are CDs FDIC insured?
Yes. CDs at FDIC-insured banks are protected up to $250,000 per depositor per institution. If your CD ladder exceeds $250,000 at one bank, consider spreading across multiple institutions for full coverage.
Should I break a CD early to rebuild a ladder?
Usually not. Early withdrawal penalties typically cost 2-6 months of interest. Only break a CD early if you find a significantly better rate and the new earnings offset the penalty cost. CD ladders are designed to avoid this dilemma by always having a CD maturing soon.