Build a CD ladder that keeps cash working
A CD ladder splits your money across certificates that mature at staggered dates, so a rung frees up on a regular schedule while the rest keeps earning higher long-term rates. Enter a total amount, how many rungs you want, the spacing between them, and an APY to see the full schedule — amount per rung, maturity dates, and the interest your ladder earns. Everything runs in your browser — nothing is uploaded.
How the ladder is built
- The total is divided equally across the rungs. Rung 1 matures after one spacing period, rung 2 after two, and so on, so the longest rung's term is rungs × spacing.
- Interest uses the APY you enter, compounded once per year to maturity: value = principal × (1 + APY)years. APY already bakes in compounding.
- A single blended APY is applied to every rung. In practice, longer terms may pay a different rate — check current offers for each term.
- Maturity dates count forward in whole months from today; interest assumes you hold each CD to maturity without early withdrawal.
An estimate for planning, not a rate quote or financial advice. It ignores early-withdrawal penalties, taxes on interest (CD interest is taxable the year it's credited), and rate changes when you reinvest a matured rung. Confirm each term's APY with your bank or credit union.
What is a CD ladder?
A CD ladder is a set of certificates of deposit with staggered maturity dates. Instead of locking your entire balance into one term, you divide it into equal "rungs" — say five CDs maturing one year apart. Each year a rung matures and you can either spend the cash or reinvest it into a new long-term CD at the top of the ladder. The ladder blends the higher yields of long CDs with the regular access of short ones.
Why build a ladder instead of one big CD?
- Liquidity without penalty. A rung matures on a predictable schedule, so you reach some of your money regularly without paying an early-withdrawal penalty.
- Rate protection. Because you're always reinvesting a rung, you're never fully locked in when rates rise — and you keep some long-term yield when rates fall.
- Steady income. Retirees often ladder CDs so a chunk matures each year to cover expenses.
How to reinvest a maturing rung
The classic move is to reinvest each maturing rung into a new CD at the longest rung of your ladder. After a full cycle, every rung is a long-term CD (capturing the best rate), yet one still matures every spacing period. If you'd rather keep the ladder short — for an emergency reserve, say — just choose a shorter spacing and fewer rungs.
CD ladder vs. a high-yield savings account
A high-yield savings account keeps every dollar liquid but its rate can change any day. A CD locks your rate for the term, which is valuable when you expect rates to fall, but ties the money up. A ladder is the middle path: most of your balance earns locked CD rates while a portion frees up on schedule. Many savers pair a small savings buffer with a CD ladder for the rest.
Frequently asked questions
How does a CD ladder work?
You split your money into equal amounts and buy CDs with staggered terms — for example five CDs maturing one, two, three, four, and five years out. As each shorter CD matures you reinvest it into a new longest-term CD, so you always have one maturing soon while the rest earn higher long-term rates.
How many rungs should a CD ladder have?
It depends on your goal. A common setup is five rungs spaced a year apart, but you can build anywhere from two to ten. More rungs smooth out access and rate changes; fewer rungs are simpler to manage. Shorter spacing (such as three or six months) gives you access more often but usually at lower rates.
How is the interest on each CD calculated?
This calculator applies the APY you enter to each rung's principal, compounded to its maturity: value equals principal times (1 + APY) raised to the number of years in the term. APY already reflects compounding, so a $5,000 rung at 4.25% APY held three years grows to about $6,000 including roughly $665 of interest.
Is CD interest taxable?
Yes. Interest credited on a CD is taxable as ordinary income in the year it's earned, even if you don't withdraw it, and your bank reports it on a 1099-INT. Holding CDs inside an IRA can defer or avoid that tax. This calculator shows pre-tax interest.
What happens if I withdraw from a CD early?
Most CDs charge an early-withdrawal penalty — commonly a few months to a year of interest — if you cash out before maturity. That's the whole point of a ladder: with a rung maturing on schedule, you rarely need to break a CD early to reach cash.
Fit your cash plan into the bigger picture
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