CD Ladder Calculator
Build a rolling certificate of deposit ladder for income and liquidity
Last updated: November 2025 · Default rates approximate as of 2026 Q2
Ladder Configuration
Per rung: $10,000
Expected Rates by Tenor (editable)
Initial Ladder Allocation
| Rung | Tenor | Principal | Rate | Year-1 Interest |
|---|---|---|---|---|
| 1 | 1 year | $10,000 | 4.50% | $450 |
| 2 | 2 years | $10,000 | 4.40% | $440 |
| 3 | 3 years | $10,000 | 4.30% | $430 |
| 4 | 4 years | $10,000 | 4.20% | $420 |
| 5 | 5 years | $10,000 | 4.10% | $410 |
10-Year Rolling Reinvestment
When a rung matures, principal + interest is reinvested into a new 5-year CD at the 4.10% rate shown.
Reinvestment Schedule
| Year | Interest Income | # Maturing | Maturing Value | Portfolio Value |
|---|---|---|---|---|
| 1 | $2,150 | 1 | $10,450 | $50,450 |
| 2 | $2,128 | 1 | $10,899 | $51,349 |
| 3 | $2,135 | 1 | $11,346 | $52,696 |
| 4 | $2,171 | 1 | $11,789 | $54,484 |
| 5 | $2,234 | 1 | $12,225 | $56,710 |
| 6 | $2,325 | 1 | $12,775 | $59,035 |
| 7 | $2,420 | 1 | $13,325 | $61,460 |
| 8 | $2,520 | 1 | $13,871 | $63,985 |
| 9 | $2,623 | 1 | $14,412 | $66,608 |
| 10 | $2,731 | 1 | $14,945 | $69,328 |
Understanding CD Ladders
How a Ladder Works
A CD ladder splits a lump sum into equal portions across CDs with staggered maturities. With $50,000 across a 5-rung 1-5 year ladder, you buy $10,000 in a 1-year CD, $10,000 in a 2-year, and so on. When the 1-year matures, you reinvest the proceeds into a new 5-year CD (now the longest rung). Each subsequent year, one rung matures and rolls into a new 5-year. After year 5, you have five 5-year CDs all yielding the long-term rate, but one matures every year for liquidity.
Why Not Just Buy One Long CD?
Locking everything in a single 5-year CD captures the long-term rate but exposes you to two risks: liquidity (cannot access funds without an early-withdrawal penalty) and reinvestment risk concentration (when it matures, you reinvest the entire amount at whatever rate exists then). A ladder smooths both, you always have a rung maturing soon for cash needs, and you smooth out the rate cycle so you never have all-or-nothing exposure to current rates.
FDIC and Bank Diversification
FDIC insurance covers up to $250,000 per depositor per insured bank per ownership category. For ladders above $250k, spread across multiple banks or use multiple ownership categories (single, joint, IRA, trust) at the same bank. Verify each bank's FDIC charter on FDIC.gov BankFind to avoid sister-bank concentration (some "different" banks share a charter and the limit). For very large ladders, services like IntraFi Cash Service (formerly CDARS) automate diversification across hundreds of banks while keeping you under FDIC limits.
CD Ladder vs Money Market vs Treasury Ladder
Money market funds offer daily liquidity but variable rates that can drop quickly when the Fed cuts. CDs lock in the rate but penalize early withdrawal. T-Bill ladders are similar to CDs but issued by the US Treasury, exempt from state income tax (a real advantage in CA, NY, NJ, etc.), and sold on a deep secondary market without penalty (but with price risk). CDs at top online banks typically beat T-Bills by 0.25 to 0.75%, especially at 1-5 year tenors when bank competition is strong.
Frequently Asked Questions
CD ladder vs bond ladder?
CDs are FDIC-insured ($250k per depositor per bank) with fixed terms and early-withdrawal penalties. Bond ladders use individual Treasuries, corporates, or munis sold on the secondary market with price risk. CDs typically beat short Treasuries on rate; bonds offer broader credit and tax-exempt options (munis).
FDIC insurance limits?
$250,000 per depositor per insured bank per ownership category. Stack a larger ladder across multiple banks or use joint, IRA, and trust ownership categories at one bank. Verify bank charters on FDIC.gov BankFind to avoid sister-bank concentration.
Brokered vs direct CDs?
Direct CDs (bank/credit union): higher rates often, easy early withdrawal with penalty, auto-renewal, simple FDIC tracking. Brokered (Fidelity/Schwab/Vanguard): broader selection, consolidated 1099, but no early withdrawal (sell at market price, often a loss), often callable, no auto-renew.
What are early withdrawal penalties?
Typical: 3 months of interest on 1-year CDs, 6 months for 1-3 year, 12 months for 4-5 year, sometimes 18-24 months for 7-10 year. The penalty can eat into principal if the CD is broken in the first months before enough interest has accrued.
Why ladder instead of one CD?
A ladder solves liquidity (one rung matures each year, no penalty needed for cash) and reinvestment risk (you smooth rate cycle exposure so you are never all-or-nothing at one rate moment). You capture most of the long-CD yield premium while keeping meaningful liquidity each year.