Example figures below are illustrative. For current CD rates checked on each bank’s website, see our CD rates guide.
A CD ladder is a simple way to get the higher rates of longer CDs without locking up all your money for years. Instead of putting everything into one CD, you split it across several CDs that mature at different times. Here’s how it works and how to build one.
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Why Not Just Buy One CD?
A certificate of deposit (CD) pays a fixed rate for a set term, from a few months to several years. The catch is access: if you withdraw before the CD matures, you usually pay an early withdrawal penalty. One big five-year CD might pay a good rate, but your money is tied up for five years. One short CD is flexible, but you’ll have to reinvest at whatever rates exist when it matures.
A ladder gives you a bit of both.
How a CD Ladder Works
You divide your money into equal parts and put each part into a CD with a different term. As each CD matures, you either use the money or reinvest it in a new CD at the longest term in your ladder. After the first few years, one CD matures every year, and every CD is earning the longer-term rate.
Example: a five-year ladder with $10,000
| CD | Amount | Term at the start | When it matures | What you do then |
|---|---|---|---|---|
| 1 | $2,000 | 1 year | Year 1 | Reinvest in a 5-year CD (or use the money) |
| 2 | $2,000 | 2 years | Year 2 | Reinvest in a 5-year CD |
| 3 | $2,000 | 3 years | Year 3 | Reinvest in a 5-year CD |
| 4 | $2,000 | 4 years | Year 4 | Reinvest in a 5-year CD |
| 5 | $2,000 | 5 years | Year 5 | Reinvest in a 5-year CD |
From year five on, you have five 5-year CDs, and one of them matures every year. That gives you regular access to a fifth of your money while most of it earns long-term rates.
A shorter version
You don’t need years. A “mini ladder” using 3-, 6-, 9- and 12-month CDs gives you access to part of your money every quarter. This can suit savings for a goal that’s one or two years away.
Pros and Cons
Pros
- Regular access to part of your money without early withdrawal penalties
- Less risk of locking everything in right before rates rise
- Rates are fixed, so you know exactly what each CD will earn
- CDs at FDIC-insured banks and NCUA-insured credit unions are insured like other deposits
Cons
- It takes a little organization to track maturity dates
- If rates fall, the CDs you reinvest will earn less
- Long-term CDs don’t always pay more than short-term ones. When we checked in October 2026, some banks paid more on 12- or 18-month CDs than on 5-year CDs, so compare before you commit
- Many banks require minimum deposits, so very small balances may not work
How to Build Your Ladder: Step by Step
- Decide how much to invest and how often you want access to part of it.
- Choose the terms — for example, 1 to 5 years, or 3 to 12 months.
- Compare rates for each term. You don’t have to use one bank for every rung. Our CD rates guide lists current rates and minimum deposits checked on each bank’s site.
- Check the early withdrawal penalty and minimum deposit for each CD before opening it.
- Write down every maturity date and set calendar reminders a week or two before each one.
- Decide what happens at maturity. Many banks renew CDs automatically for the same term, sometimes at a lower rate. Use the grace period after maturity to move the money if you find a better rate.
Alternatives to a CD Ladder
- High-yield savings account: fully flexible, but the rate can change at any time. See our high-yield savings guide.
- No-penalty CD: a fixed rate with the option to withdraw early, usually at a lower rate than standard CDs.
- A single short-term CD: simpler if you’ll need the money within a year.
Keep It Insured
FDIC and NCUA insurance cover CDs up to $250,000 per depositor, per institution, per ownership category. If your ladder is large, spreading rungs across banks also spreads your insurance coverage. Our guide to how FDIC insurance works explains the limits.
Bottom Line
A CD ladder trades a little organization for a lot of flexibility: you get fixed rates and regular access to your money. Compare rates term by term — longer isn’t always better — and keep track of maturity dates so your CDs don’t renew automatically at a rate you didn’t choose.
This article is for informational purposes only and is not financial advice. BankNavigatorr has no affiliate relationships with any bank and is supported by advertising.