{"id":14002,"date":"2023-12-29T10:35:35","date_gmt":"2023-12-29T17:35:35","guid":{"rendered":"https:\/\/www.iccu.com\/?p=14002"},"modified":"2024-08-14T11:33:47","modified_gmt":"2024-08-14T17:33:47","slug":"everything-you-need-to-know-about-cd-laddering","status":"publish","type":"post","link":"https:\/\/www.iccu.com\/blog\/financial-education\/everything-you-need-to-know-about-cd-laddering\/","title":{"rendered":"Everything You Need to Know About CD Laddering"},"content":{"rendered":"\n

Certificates of deposit (CDs), like all savings accounts, come with pros and cons. If you\u2019ve read our previous article about CD basics,<\/a> you know that a certificate of deposit can give you access to a higher interest rate \u2026 at the cost of limited access to your money. If that sounds like too high of a price, a CD laddering strategy might be the best choice for you.<\/p>\n\n\n\n

What is CD Laddering?<\/h2>\n\n\n\n

A CD is a<\/strong> savings product<\/strong> that gives you a fixed rate for a fixed amount of time. Members who prefer low-risk savings options tend to love CDs for their predictable returns.<\/p>\n\n\n\n

CD laddering is a strategy<\/strong> that can give you quicker access to your funds. Instead of locking your money away in one CD for, say, five years, you divide that money into multiple CDs, each with a slightly shorter term. As each CD matures, you can either pull that money out or roll it into a longer-term CD. This strategy is generally used for long-term savings (think years), but many have found success in opening mini CD ladders as well.<\/p>\n\n\n\n

What is a mini-ladder?<\/h3>\n\n\n\n

Because CDs with longer terms tend to have higher interest rates, a typical laddering strategy includes CDs that span years rather than months. In contrast, a mini-ladder uses CDs that span months, which can lead to more flexibility and less overall savings. If you\u2019re just dipping your toes into the world of CD laddering, this could be a good option for your first ladder.<\/p>\n\n\n\n

<\/div>\n\n\n
\n
\"\"<\/figure>\n<\/div>\n\n\n
<\/div>\n\n\n\n

How to Build a CD Ladder<\/h2>\n\n\n\n

Step 1: Open multiple CDs<\/h3>\n\n\n\n

Let\u2019s pretend you have $10,000 you\u2019re considering putting into a CD. If you deposit that money into one 5-year CD, you\u2019ll get one fixed rate of return and one chance to withdraw that money without a penalty \u2014 when it matures after five years. If instead you decide to ladder multiple CDs, you can access that money once every year.<\/p>\n\n\n\n

To set up a CD ladder, you need to open several accounts at once, each with a different term:<\/p>\n\n\n\n