What is a CD ladder?
A CD ladder spreads your cash across several certificates of deposit that mature at staggered dates — for example five equal CDs maturing in 1, 2, 3, 4, and 5 years. It is a simple way to capture the higher rates that longer terms usually pay while still having a chunk of money come due every year.
Why ladder instead of one big CD?
- Liquidity: one rung matures every year, so you can spend or reinvest without paying an early-withdrawal penalty.
- Higher average yield: the longer rungs lift your blended APY above what a single short CD pays.
- Rate protection: you are not locking everything in at one moment, so you average through rate cycles.
How to keep the ladder rolling
Each time the shortest rung matures, reinvest it into a new CD at the longest term on your ladder. After a few years every rung is a long-term CD, yet one still matures each year — so you keep the long-term rate with short-term access. This calculator shows each rung held to its own maturity; it does not assume future reinvestment rates, which no one can predict.