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Laddering CDs

A flexible long-term strategy

Stagger maturity dates with CD laddering

Simply put, CD laddering is a way of investing where you plan for staggered maturity dates, to keep some of your investments liquid and also capitalize on changing rates. By planning ahead for the long term, you can keep an eye on your earnings and have the flexibility to make changes as individual CDs mature.

Some advantages of CD laddering

  • A portion of your investments are available periodically
  • Helps avoid investing all of your funds during market cycles when CD rates are lower
  • Simplifies your CD investments
  • Gives you a long-term strategy for your investments

An example of a CD ladder

Let’s say you have $80,000 total to invest in CDs. If you buy just one CD with a longer term, you have to wait for it to mature, locking up your total investment. If you buy just one CD with a shorter term, it usually will generate fewer returns. Instead you could:

  • Purchase a 3-month CD for $20,000
  • Purchase a 6-month CD for $20,000
  • Purchase a 9-month CD for $20,000
  • Purchase a 12-month CD for $20,000

Because your funds are staggered, you will have access to a portion at intervals you can plan on, in this example every three months. As each matures, you can reinvest into a longer maturity CD (which usually pays higher returns).


Because you know that a portion of your investment portfolio will mature regularly (every 3 months in this example), you will have access to that portion on a regular basis. This can help if part of your goal is to maintain an emergency fund. And if you need to cash out a CD early the penalty fees will be less than if you had invested the entire sum in just one CD.

Changing market

A CD ladder can spread out your investments so you can limit the effects of a low-rate market cycle. Instead of putting all your funds into one CD, you spread them out and systematically invest. If rates are rising when one comes to maturity, that’s great. If rates are falling, you limit the impact. Over time, you can optimize your returns.

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