What Is a CD Ladder?
A CD ladder divides your savings equally across several CDs with different terms — for example, $20,000 split into five $4,000 CDs maturing in 1, 2, 3, 4, and 5 years. Every year one CD matures, and you can either spend that money or reinvest it into a new 5-year CD at the top of the ladder.
Why Ladder Instead of One Big CD?
- Liquidity — part of your money becomes available every year without penalties.
- Rate protection — if rates rise, your maturing rungs get reinvested at the new higher rates. If rates fall, your longer rungs keep earning the old higher rate.
- Higher average yield — you capture long-term CD rates on most of your money instead of parking it all in short terms.
How to Use This Calculator
Enter your total savings, the average APY you expect across terms, and how many rungs you want. The calculator shows what each rung is worth at maturity. In reality each term has a slightly different APY — enter a blended average, or run the calculation separately per rung for precision.