Plan your CD ladder strategy by entering your total investment amount, number of CD rungs, and the APY for each term. You'll see the maturity value per rung, total interest earned, and a breakdown of your ladder so you know exactly when each CD matures and how much you'll receive.
Total Interest Earned
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Total Maturity Value
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Investment Per Rung
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Average Blended APY
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A CD ladder is a savings strategy where you divide your money across multiple certificates of deposit (CDs) with different maturity dates — for example, 1-year, 2-year, 3-year, 4-year, and 5-year CDs. As each CD matures, you can access your funds or reinvest into a new long-term CD, giving you regular liquidity while still earning higher rates typically reserved for longer terms.
Putting all your money in a single long-term CD locks up your funds and exposes you to interest rate risk — if rates rise, you're stuck with the old rate. A CD ladder staggers your maturities so you regain access to a portion of your money each year, can reinvest at current rates, and still benefit from higher yields on longer-term CDs.
Most CD ladders have 3 to 5 rungs, with each rung representing a different term length. A 5-rung ladder (1 through 5 years) is the most common choice as it balances liquidity and yield well. Fewer rungs give you less frequent access to funds but may simplify management.
When a CD matures, you typically have a short grace period (often 7–10 days) to decide what to do with the funds. In a ladder strategy, you would reinvest the proceeds into a new long-term CD — for example, a new 5-year CD — to keep the ladder rolling and maintain your regular maturity schedule.
CDs held at FDIC-insured banks are covered up to $250,000 per depositor, per institution, making them one of the safest investment options available. Credit unions offer similar protection through NCUA insurance. Your principal and guaranteed interest are protected as long as you stay within those limits.
APY (Annual Percentage Yield) reflects the total interest you earn in a year after accounting for compounding, while the stated interest rate (APR) does not factor in compounding. APY is always equal to or greater than the stated rate. This calculator uses APY to compute your returns, so the results already account for compounding frequency.
At FDIC-insured institutions, you cannot lose your principal on a CD as long as you don't withdraw early. However, early withdrawal penalties can reduce or eliminate your interest earnings and, in some cases, dip into principal. Sticking to your ladder schedule avoids these penalties.
More frequent compounding means interest is calculated and added to your balance more often, which accelerates your earnings over time. Daily compounding produces slightly more than monthly, which produces more than quarterly or annual compounding. For most CDs, the difference is modest but noticeable on larger balances or longer terms.