How to build a CD ladder and lock in the best rates for your savings
CD laddering explained: A saving or investing strategy where money is invested in several certificates of deposit (CDs) with different maturities.
Is CD laddering a good idea: Savers benefit from their money becoming available at regular intervals while also taking advantage of the typically higher APYs on longer-term CDs.
How to ladder CDs: Your savings are split up and deposited into shorter- and longer-term CD accounts. When each CD matures, the money can be invested into a new long-term option to keep the ladder going.
CD laddering is a savings strategy where you spread cash equally across multiple certificates of deposit (CDs) with different maturity dates. This way, you capture the often higher rates of longer-term savings vehicles while ensuring liquidity by keeping portions of your money in shorter-term accounts. Instead of lumping all your funds in one CD, with a CD ladder strategy, not all of your savings are locked up for years.
Having your funds spread across multiple CDs also helps reduce the risk of locking in a single CD rate if interest rates continue to rise during your term. CDs are known for offering some of the highest interest rates among savings options, but their fixed terms can be a drawback. CD laddering is one solution to this issue. Because your money becomes available at regular intervals, you can easily explore your options for a potentially better rate elsewhere.
The basic idea behind building a CD ladder is to open multiple CD accounts with staggered maturity dates and reinvest the funds each time a CD matures.
Here are five steps to consider as you start your CD laddering strategy:
If you had $90,000 to save, you could spread out your money between three different CD accounts.
When the first CD matures after one year, you can cash out or choose to reinvest it into another three-year CD that offers a higher rate than a one-year CD. Each of the other CDs you opened will then be one year closer to their maturity dates.
The idea of CD laddering is to continue replacing each maturing CD with a CD rung that is farthest away. In this CD ladder example, that would mean adding a new three-year CD each time an existing CD matures.
To take the example further, if you have $1 million to save and want shorter intervals to access your funds, you could spread your money in $200,000 increments across five CDs ranging from three to 15 months:
With higher deposit amounts as in this example, you would have to make sure that each CD balance (including any interest earned) stays below the $250,000 FDIC insurance threshold. You can use Raisin’s CD calculator to check how this might stack up.
It's easy to create a CD ladder like this with the Raisin platform. Not only can your savings grow steadily, but you also have the opportunity to adjust your CD laddering strategy every three months. You can find out more in our guide to certificates of deposit.
Taking the $90,000 example and adding interest rates, you can see how your money could grow using staggered CD terms and different interest rates.
Here’s how this CD ladder might work:
By the end of the first year, your 1-year CD will have matured, and you’ll have $31,140 (the initial $30,000 plus $1,140 in interest). You can then roll that $31,140 into a new 3-year CD, keeping the ladder moving and your savings growing.
Note: The APYs in the example above are for illustrative purposes only.
The traditional CD ladder example may be best suited to long-term savers who are happy to keep some of their cash locked away. But CD laddering is highly adaptable, so you can adjust it to suit your savings needs.
Here are a few other CD laddering strategies:
The best CD laddering strategy for you will ultimately depend on your goals and access needs. Find out more about how to find a CD for your needs.
Although interest rates on savings products have come down slightly since the highs of 2024, savers and investors still have the opportunity to find and lock in relatively high rates.
Constantly opening new bank accounts to capture the highest CD ladder rates can be complicated and time-consuming. And if you choose multiple banks, that means multiple accounts, log ins, and balances to remember and review.
Raisin lets you put your cash to work by giving you access to an exclusive network of banks and savings products, including high-yield savings accounts, money market accounts, and CDs — all from a single, unified login.
Best of all, with Raisin you don’t have to worry about fees eating into your savings — we never charge you fees to save with us.
If you’re ready to make the most of your hard-earned money, without the hassle of multiple separate accounts, then check our guide on how to open multiple CDs with Raisin, view our latest CD offers below, and start your CD laddering journey.
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Raisin is not an FDIC-insured bank or NCUA-insured credit union and does not hold any customer funds. FDIC deposit insurance covers the failure of an insured bank and NCUA deposit insurance coverage covers the failure of an insured credit union.
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.