The Long and the Short of Building a CD Ladder

Great 3-Month CD Rates and 11-Month No Penalty CDs

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. If you’ve thought about using a 3-month CD as the first rung in your CD ladder, consider the following options.

Option 1: Start with a 3-Month CD
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 idea is that you probably will earn more interest on the CDs with the longest terms, while enjoying periodic access to your funds in those with shorter terms.

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
Another option might be to build a CD ladder that begins with the No Penalty 11-Month CD from Ally Bank. With the No Penalty CD, you get a CD that allows you to withdraw all your money, including interest earned, without penalty, any time after the first six days following the date you fund your CD. And since a CD ladder's structure is up to you, the rest of your ladder could be made up of a combination of other CDs that works for your goals—likely beating rates you could earn on a 3-month CD.

Learn more at Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.

Ally Bank, Member FDIC

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