The Long and the Short of Building a CD Ladder

Great 3-Month CD Rates and An 11-Month No Penalty CD, Neither Has a Minimum Opening Deposit

October 2012

There are many reasons you might consider building a CD ladder. Most of them have to do with having periodic access to at least part of your funds, as opposed to choosing a longer-term CD. But if you're considering a 3-month CD as your first rung, there's at least one other choice to consider.

Option 1: Start with a 3-Month CD.
You could easily begin your CD ladder with a 3-month CD. For example, imagine that you have $5,000 to save. Rather than place it all into one CD, you could put:

  • $1,000 in a 3-month CD
  • $1,000 in a 6-month CD
  • $1,000 in a 9-month CD
  • $1,000 in a 12-month CD
  • And finally, $1,000 in an 18-month CD

The value is that you will probably earn more interest on the CDs with the furthest maturity dates, while enjoying periodic access with shorter, 9- 6- and 3-month CD accounts.

On the other hand, the simple reality is that a "mini CD ladder" with a 3-month CD as the first rung may not be the best solution, even with the built-in discipline that CDs afford.

Option 2: The Ally Bank No Penalty CD
A better option might be to build a CD ladder that begins with the No Penalty 11-Month CD from Ally Bank. With it, you get a competitive rate, and if you need to withdraw your funds before the 11-Month term is up, you can do so, including all your interest earned, without paying any penalties, anytime after the first six days following the date you fund your account.

And since a CD ladder's structure is completely up to you, the rest of your ladder could be made up of a combination of CDs that works for you and your goals — and you're more likely beat what you can find with a 3-month CD.

Ally Bank No Penalty CD Rates
Even when you include the average for banks that offer jumbo CDs, the Ally Bank 11-month No Penalty CD annual percentage yield (APY) was consistently more than four times the FDIC national average for 3-month CDs and almost twice the national average for all 12-month CDs (based on a comparison of our APYs vs. FDIC national averages from March 2010 to January 2011).

Just keep in mind that if you do make an early withdrawal, it must be for the full amount, including all the earned interest, and you can't make a withdrawal until after the first 6 days following the date you funded your account.

But as attractive as a higher APY is, it's important to think about your own savings habits, too. If the specter of an early withdrawal penalty is the kind of motivation you need to start saving in a 3-month CD instead of using credit, for example, earning even a little interest in the short term still beats paying any interest — by a mile.

Learn more at, or by calling 877-247-ALLY (2559), where live customer care is available 24/7.

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