CD Ladder Basics

CD Ladder Basics

A CD Ladder can provide a savings strategy with both short- and long-term benefits. To better understand this simple savings approach, see the example below.

CD Ladder Graph 1

Where to start

For this example, we will use a $20,000 initial investment and build a 5-year ladder. To begin, divide the money evenly over the 5 years, by opening 5 CDs with terms 12 months apart. This provides access to a portion of your funds every 12 months. 

After 12 months

When your 12-month CD matures, you then may decide to ladder the investment by renewing it to a new 5-year CD. By renewing to the longest term, you will generally enjoy the highest rates available. 
CD Ladder Graph 2
CD Ladder Graph 3


This step is repeated each 12 months until all the original CDs have been renewed. After this, your laddering strategy is on auto-pilot. Each CD will continue to renew for 5 years, but one will mature every 12 months providing annual access to a portion of your funds.