Laddering CDs (certificates of deposit) might sound complicated, but it’s a pretty simple way to help your savings work harder for you. With a CD ladder, you can take advantage of the higher rates generally offered by long-term CDs and still maintain regular access to your money.

The basic idea is to open several CDs with staggered maturity dates, so that some of your cash is available to use or rollover at regular intervals. This way, you can take advantage of better rates—usually offered by long-term CDs—without the long-term commitment of having all your money tied up for three-to-five years or more. (Need a quick refresher on CDs? Go here.)

You can build a custom CD ladder.

One of the great things about building CD ladders is that you can customize them to fit your own situation. You can vary the amount in each CD depending on what you might need access to in the future or vary the term-lengths to suit your own timetable.

Since CD laddering is a little easier to grasp visually, we’ve created a couple of ways for you to see how they work at Ally.com. You can view just the basics, or, better yet, run your own scenarios with our handy CD ladder tool.

Here’s a walk-through of our interactive CD ladder tool plus all the details you need to get your own CD ladder started:

Choose a term length and an initial deposit.

When you choose the “step-by-step” tab in the Ally Bank CD ladder tool, you’ll begin by deciding on the longest-term CD you want to open. Usually that means choosing a three-, four-, or five-year term, since those often offer the highest APYs (annual percentage yields). This term length will determine the overall structure of your CD ladder.

Then, choose a lump sum you’d like to use for your CD ladder. How much you want to start with will vary according to your own savings goals. (You can use our handy CD ladder calculator to estimate your earnings and fine-tune your projections.)

In the screenshot below you can see that we’ve chosen a five-year ladder and a $50,000 initial deposit amount to build our sample ladder:

Divide the money up.

Once you’ve got you initial deposit and longest term decided, it’s time to divide the money up—just click the purple “divide money” button—among the number of CDs you want to open.

Our sample ladder divides the $50,000 initial deposit into five CDs maturing a year apart, with $10,000 in each one:

See how the renewal process works.

Once the first CD in your ladder matures, you’ll put that money into a new longer-term CD—the longest-term CD in your ladder.

In the example we’ve been using, the longest-term CD is five years, and the first CD matures in 12 months. So, at 12 months you’d put that money into a five-year CD and continue the pattern until your ladder is made up of long-term CDs. That way you’re earning the most interest and still getting access to your money every 12 months if you need it.

The Ally CD laddering tool will let you see what each year looks like one at a time, until the sample ladder looks like this:


APYs and CD types shown in this screenshot are for illustration only. Visit Ally.com for current rates.

When you get your real-life ladder to this point, you’ll be able to manage your ladder as much or as little as you like. If you leave it on autopilot, so to speak, each year the maturing CD will renew at the new rate for that term. If you prefer to be a little more hands-on, you can decide each year what’s best for the money in the maturing CD.

Ready to build a real ladder with real returns?

If you play around a bit with different deposit amounts and term lengths on the CD ladder tool, you’ll be able to see your projected earnings scenarios and decide on your perfect CD ladder.

When you’re ready to take the next step, go here (or click on the “open account” button on the last step of the CD ladder tool) to compare rates and the different types of CDs at Ally Bank. Then, you can start opening your CD accounts online.