{"id":19666,"date":"2025-12-15T04:20:00","date_gmt":"2025-12-15T10:20:00","guid":{"rendered":"https:\/\/www.discover.com\/online-banking\/banking-topics\/?p=19666"},"modified":"2026-02-04T12:07:23","modified_gmt":"2026-02-04T18:07:23","slug":"cd-ladder","status":"publish","type":"post","link":"https:\/\/www.discover.com\/online-banking\/banking-topics\/cd-ladder\/","title":{"rendered":"What is a CD ladder? Your guide on how to build one"},"content":{"rendered":"\n

Savings strategies are always a balancing act between risk management and growth opportunity. One way to straddle this line is by investing in multiple certificates of deposit (CDs)<\/a> with different maturity dates. Called “CD laddering,” this approach is a great way to take advantage of the higher interest rates that typically come with longer-term CDs while still ensuring you have intermittent access to your money. Hence the \u201cladder\u201d analogy \u2026 the CD on the lowest \u201crung\u201d will always be closest to maturity, while higher-rung CDs have longer terms.<\/p>\n\n\n\n

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What is a CD ladder?<\/h2>\n\n\n\n

A CD ladder is a series of CDs\u2014typically a minimum of three\u2014that are set to mature (complete their term) at regular intervals. William Stack, owner of a financial services firm based in Salem, Missouri, says CD ladders can be particularly advantageous in a rising interest rate environment<\/a>. \u201cBy breaking large CDs into smaller ones maturing at different times, you can earn progressively higher interest rates as CDs mature,\u201d he says.<\/p>\n\n\n\n

How to build a CD ladder<\/h2>\n\n\n\n

You\u2019re busy. Capital One made opening an account<\/a> easy enough to do in about 5 minutes, so you can get back to what matters.<\/p>\n\n\n\n

\u201cIt\u2019s easy to set up,\u201d says Jonda Lowe, president of a financial services firm based in Huntington, West Virginia. Begin by opening several certificates of deposit<\/a> with varying terms. Many banks let you complete the process online, but if you need additional help, a banker or broker can create a CD ladder for you.<\/p>\n\n\n\n

To design your ladder, you\u2019ll have to decide on the overall length of your ladder (or the duration of the longest-term CD) and the length of time between each CD\u2019s maturity date.<\/p>\n\n\n\n

While staggering maturity dates by one year is common, you could set your CDs to mature at intervals of your choosing\u2014every six months or two years, for example. Regardless of the CD ladder length you ultimately want to create, when you begin to build it, you\u2019ll initially have to purchase several shorter-term CDs.<\/p>\n\n\n\n

If you don\u2019t expect to need the money on short notice, a less frequent maturity cycle could be appropriate. But if you need a portion of the money quickly (let\u2019s say that a financial emergency hits), shorter maturity intervals would give you more immediate access to some of the funds, which could spare you from an early withdrawal penalty.<\/p>\n\n\n\n

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Examples of a CD ladder<\/h2>\n\n\n\n

Lowe gives an example of how to build a five-year CD ladder with five $20,000 CDs. Initially, the ladder would look like this:<\/p>\n\n\n\n