Why build a CD Ladder? 1 of 5
Building a CD Ladder lets you take advantage of the best of short and long term CDs.
Short Term CD
Shorter terms have lower rates but provide more frequent access to your money.
Long Term CD
Longer terms earn more but provide less frequent access to your money.
CD Ladder — the Best of Both
The CD Ladder combines long term earnings with more frequent access to a portion of your money.
How to start a CD Ladder 2 of 5
Starting a CD Ladder is easy. Let's use $30,000 and build a sample 3 year ladder.
Divide the money evenly and open 3 CDs with ascending terms 12 months apart. You'll benefit from:
- Access to a portion of your funds every 12 months as your CDs mature
- Increased earning power of the 2 and 3 year CDs
Though we're using a 3 year ladder for our illustration, you can grow your money ever more with a longer term ladder.
At the end of the first year 3 of 5
Over the course of a year, your CDs will grow. When your 12 month CD matures, you can choose to take your money if you need to — or you can keep your ladder going by renewing your CD.
Renew into the longest term CD
Longer terms generally pay better rates, so you'll continue your ladder by renewing into a new 3 year CD, purchased at current rates. And you'll repeat this step when your 2 and 3 year CDs mature.
Your ladder going forward 4 of 5
Once all the original CDs have been renewed, the ladder is on autopilot. The CDs in our example will continue to renew automatically into 3 year CDs, one maturing each year, for as long as you'd like. And you'll benefit from 3 year rates while still having access to a portion of your funds annually.
How do I plan my ladder? 5 of 5
Now that you understand the basics, you can choose one of the tools below to help you plan a CD Ladder of your own.
Want to go straight to results?
Use our Quick Calculator to see your estimated balance growth.
Need a little more help?
Use our Step by Step Guide to plan and build a ladder from the ground up.