How it works
A CD ladder is a deposit structure that splits one sum across several certificates of deposit with staggered maturity dates, so part of the money frees up at regular intervals while longer rungs earn the higher rates reserved for long terms. A classic five-rung ladder spreads $20,000 equally across one-, two-, three-, four- and five-year CDs; each maturity is either spent or rolled into a new longest rung, and once the ladder spins, a portion comes due every year regardless of what rates are doing. Laddering exists to solve the CD dilemma: locking all $20,000 for five years buys the best rate but surrenders access, while keeping everything liquid accepts the lowest rate. The ladder splits the difference deliberately — this calculator quantifies exactly how much the liquidity costs, typically a handful of basis points against an all-in long CD, while still beating a plain high-yield savings account. It also builds the structure sheet: rung sizes, terms, interpolated APYs and the recurring interval at which a rung matures. Projections hold rates flat and roll maturing rungs into the longest term; real yields drift, so treat results as planning figures. And mind early-withdrawal penalties — ladder only money each rung can genuinely afford to lock away.
Formula
Blended APY = mean(rung APYs) | Projected = amount × (1 + blended APY)^years, maturities rolled into the longest term
Tips
- Space rungs evenly so one matures on a fixed cadence — the cadence is the point.
- Roll each maturity into the longest term to keep the ladder spinning.
- Check FDIC/NCUA coverage and per-bank limits before splitting large sums.
- Compare against a Treasury bill ladder too — similar yields, exempt from state tax.
- Ladder only money each rung can lock away; penalties punish early exits harshly.
Frequently asked questions
- Is a CD ladder better than one long-term CD?
- Different tools. One five-year CD maximizes rate; a ladder surrenders a small yield edge for recurring access and protection if rates rise — a maturing rung reinvests at new, higher rates while the long CD stays stuck. For money you may need on any schedule, the ladder wins.
- How much money do you need to build a CD ladder?
- Less than most assume. Five rungs at $500–$1,000 each works at many banks and brokers, though the best rates often carry $1,000+ minimums. The calculator's proportions matter more than the absolute size — divide evenly and space terms uniformly.
- What happens when a CD ladder rung matures?
- You choose: spend it if that maturity was the plan, or roll it into a new longest-term CD to keep the cadence alive. Rolling preserves the structure indefinitely; spending a rung thins the ladder unless replaced. Most laddering strategies default to rolling unless the cash is earmarked.
- Are CD ladders better than high-yield savings accounts?
- Ladders typically earn more — locking multi-year terms carries a premium — while savings accounts stay fully liquid. The practical answer uses both: the emergency fund in savings, and known-horizon money beyond it in the ladder where each rung's lock matches when the cash is truly needed.
- Do CD ladders protect against falling rates?
- Partially. Long rungs locked at today's rates keep earning through a decline, so blended yield erodes slowly instead of instantly as it would in a savings account. The reverse holds too — rising rates lift the ladder only rung by rung, which is the trade-off the structure accepts.