CD Ladder Calculator

A CD ladder is a savings strategy where you split a lump sum across several CDs with staggered maturity dates — for example, equal amounts in 1-year, 2-year, 3-year, 4-year, and 5-year CDs. As each CD matures, you reinvest at the current rate, usually into a new long-term CD. This gives you access to a portion of your money every year while still earning rates closer to the highest-term CD.

You divide your deposit into equal portions and open one CD per portion at staggered terms — typically 1, 2, 3, 4, and 5 years. After year 1, the 1-year CD matures: you take the cash or roll it into a new 5-year CD. After year 2, the original 2-year CD matures and rolls into a 5-year, and so on. By year 5, every CD in the ladder is a 5-year CD, and one matures every year — so you keep the highest-term rate while always having one rung within 12 months of liquidity. See the step-by-step walkthrough above.

Most savers use a 5-rung annual ladder (terms of 1, 2, 3, 4, and 5 years) because most banks cap CDs at 5 years and an annual rolling-maturity schedule is easy to manage. A 3-rung short ladder (1/2/3 years) gives faster liquidity at the cost of a slightly lower average rate. A 4-rung ladder (1/2/3/4) is a middle ground. Long ladders beyond 5 years exist but require finding banks that offer 6, 7, or 10-year CDs, which are uncommon.

A single 5-year CD will earn slightly more total interest than a 5-rung ladder when the yield curve slopes up (long-term APYs higher than short-term), because every dollar gets the highest rate for the full 5 years. The ladder usually earns less but gives you annual liquidity: each rung matures one year apart, so you can access ~20% of your money every year without paying an early-withdrawal penalty. The ladder also reduces reinvestment risk — if rates rise, you can roll a maturing rung into a higher-rate CD each year. See the $50,000 worked example for the dollar-level trade-off.

You need at least enough to clear each bank's minimum-balance threshold for every rung. Most banks require $500–$2,500 minimums for a top-tier APY, so a 5-rung ladder typically needs $2,500–$12,500 minimum. Most ladder builders use $10,000–$100,000 — large enough to qualify for top tiers across all rungs and meaningfully diversify maturity dates. Above $250,000 (the per-bank FDIC limit), you'll want to spread rungs across multiple FDIC-insured banks to stay fully insured.

CDs at FDIC-insured banks are covered up to $250,000 per depositor, per insured bank, per ownership category. If you build a ladder at one bank, all five rungs share the same $250,000 limit. To insure a ladder larger than $250,000, split rungs across multiple FDIC-insured banks — each bank has its own separate $250,000 ceiling. Brokered CDs purchased through a brokerage are FDIC-insured if the underlying bank is, but the brokerage itself is not the insured institution.

Yes. Interest on every CD in the ladder is taxable as ordinary federal income in the year it is credited, even before the CD matures. Each bank issues a Form 1099-INT for any rung that earns $10 or more in a tax year. So a 5-rung ladder generates a 1099-INT from each rung — five separate forms if all rungs are at the same bank. Holding the ladder inside a traditional IRA defers the tax until withdrawal in retirement.

A ladder smooths out rate-change risk. If rates rise after you build the ladder, the soonest-maturing rung rolls into a higher-rate CD within a year, so the ladder catches up over time. If rates fall, your existing rungs keep earning their locked-in (higher) rates until they mature — the ladder protects you from immediate rate cuts on the long-dated portion. A single long CD locks the entire balance for one term, which can be either an advantage (if rates fall) or a drag (if rates rise).