Glossary term
CD Ladder
A CD ladder spreads savings across several certificates of deposit with staggered maturity dates, such as one, two, three, four and five years. As each CD matures, you can use the cash or reinvest it at the longest rung. The ladder gives you regular access to part of your money while still capturing longer-term rates.
Updated October 17, 2026 · Editorial Team
How CD Ladder works in practice
You start by splitting a lump sum evenly across terms. After the first year, the one-year CD matures; if you do not need the money, you buy a new five-year CD with it. Repeat each year, and eventually every rung is a five-year CD, with one maturing every 12 months.
Split $20,000 into five $4,000 CDs of one to five years. If the one-year CD pays 4.00% APY, it returns $4,000 × 1.04 = $4,160.00 after a year. If the five-year rung pays 4.25% APY, it grows to $4,000 × 1.0425^5 = $4,925.39 at maturity. These rates are illustrative; plug in the rates you are actually offered.
A ladder reduces the risk of locking all your money in at a low rate, and it limits how much you would ever need to break early. It works best for savings you will not need all at once. Track maturity dates, because many CDs renew automatically if you miss the window.
CD Ladder: quick questions
How many rungs should a CD ladder have?
There is no fixed rule. Five rungs a year apart is common, but shorter ladders with three- or six-month gaps also work.
What happens when a rung matures?
You can spend the money, move it, or buy a new CD at the longest term to keep the ladder going.
Is a CD ladder better than one long CD?
It trades a little potential yield for access and flexibility. Which suits you depends on when you may need the money.
Sources
- Certificates of deposit (CDs) — U.S. Securities and Exchange Commission (Investor.gov). Accessed October 17, 2026.
- Deposit Insurance — Federal Deposit Insurance Corporation. Accessed October 17, 2026.
We cite primary sources: regulators, central-bank data and federal agencies. Worked examples on this page are our own calculations. See our methodology.
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