CD Ladder Calculator
Design a staggered maturity strategy that balances yield and liquidity across multiple certificates of deposit.
Results
The CD Ladder Calculator computes the blended yield, total interest earned, and maturity schedule for a multi-rung CD ladder. The output displays each rung's individual contribution and the combined return of the full ladder.
CD Laddering Strategy
A CD ladder divides a single large deposit into multiple certificates with different maturity dates. The strategy provides regular access to funds while maintaining exposure to higher long-term interest rates.
How CD Laddering Works
CD laddering works by splitting a total investment evenly across certificates with sequential maturity dates. A $25,000 investment split into a 5-rung ladder allocates $5,000 to each rung: a 1-year CD, a 2-year CD, a 3-year CD, a 4-year CD, and a 5-year CD. When the 1-year CD matures, the depositor reinvests the proceeds into a new 5-year CD at the current market rate. After 5 years, every rung in the ladder is a 5-year CD maturing annually.
Blended Yield Calculation
The blended yield of a CD ladder is the weighted average of all individual rung APY rates. A 5-rung ladder with rates of 4.25%, 4.50%, 4.75%, 5.00%, and 5.25% produces a blended yield of 4.75%. The blended yield is lower than the highest individual rate but higher than the lowest, providing a balanced return profile.
Barbell CD Strategy
The barbell CD strategy concentrates deposits at the shortest and longest terms, skipping intermediate maturities. A barbell deposits 50% in 3-month CDs (high liquidity) and 50% in 5-year CDs (high yield). This approach maximizes both near-term access and long-term returns, but leaves no funds maturing in the 1-to-4-year range.
Bullet CD Strategy
The bullet CD strategy concentrates all certificates to mature at a single target date. A depositor saving $30,000 for a home down payment in 3 years purchases multiple CDs — a 1-year, 2-year, and 3-year — all timed to mature by the same date. The earlier CDs are reinvested into short-term certificates until the target date arrives.
Custom Ladder Builder
Enter your total investment and choose the number of rungs to see how a CD ladder distributes funds and calculates the blended yield.
Ladder Builder
CD Ladder for Retirees
CD laddering for retirees provides predictable annual income from maturing certificates. A retiree with $100,000 can build a 5-year ladder with $20,000 per rung. Each year, a certificate matures and provides $20,000 plus accrued interest for living expenses. The maturing rung is reinvested into a new 5-year CD to maintain the ladder structure.
Reinvestment Risk Mitigation
CD laddering mitigates reinvestment risk by exposing only a fraction of the portfolio to rate changes each year. A depositor with a single $50,000 5-year CD faces the full impact of rate changes when the entire balance renews at once. A 5-rung ladder spreads this risk across 5 annual renewal events, averaging the rate environment over time.
Build Your CD Ladder
Use the calculator above to model different ladder configurations and find the optimal balance between liquidity and yield.
Start BuildingFAQs
What is a CD ladder?
A CD ladder is a savings strategy that divides a total deposit into multiple certificates with staggered maturity dates. The strategy provides periodic liquidity while earning higher long-term rates.
How many rungs should a CD ladder have?
A CD ladder typically has 3 to 5 rungs. A 5-rung ladder with 1-year spacing provides annual access to funds while maintaining exposure to 5-year APY rates.
What is a barbell CD strategy?
A barbell CD strategy concentrates deposits at the short end (3-6 months) and long end (4-5 years) of the maturity spectrum. It maximizes both liquidity and yield by skipping intermediate terms.
How do I reinvest a maturing CD in a ladder?
Reinvest a maturing CD by rolling the principal and interest into a new long-term CD at the top of the ladder. A maturing 1-year rung rolls into a new 5-year CD.
Is CD laddering better than a single long-term CD?
CD laddering reduces reinvestment risk and provides periodic liquidity that a single long-term CD does not offer. The blended yield is slightly lower, but fund access is available annually.