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What is CD Laddering?

We’re sure you have noticed the flurry of activity surrounding deposit rates lately. In June, the Federal Reserve increased their rate by one-quarter percent. That means financial institutions across the country are raising their rates as well. Certificates of deposit or CDs come in all shapes and sizes, which can make it difficult to find the best option for your particular financial goals. The most lucrative option may involve multiple types of CDs.


The Benefits:

CD laddering is a technique where an individual uses multiple CDs with differing maturity dates and rates. Using several different CD options allows you more flexibility. Laddering CDs with different rates of maturity allows you to quickly reinvest those CDs with short terms. You can be more agile with your investments and take advantage of changing rates as those short term CDs mature. Laddering CDs also allows you to reinvest those short term earnings to maximize your pay outs. CDs also provide a higher level of stability and security than investing in the stock market. CDs will only cost you money if you remove them before their maturity date. Since these are deposit accounts, they are insured by the National Credit Union Administration for up to $250,000.

How does it work?

There is not one perfect way to build a CD ladder. They can be structured to consistently pay out dividends and supplement income for retirement. They can also be used to help bolster your savings as you save for a down payment for a house. First and foremost, determine the end goal.

Let’s say you want to put $40,000 into a CD. Instead of putting all that money in one, high-yield four-year CD, you might put $10,000 into four different CDs; a four-year, a three-year, a two-year and a one-year. When the first CD matures, you can then open another four-year CD, repeating the process with the others as they mature. That way you can have periodic access to your money if you need it while still keeping some money in high-yield, long-term accounts. The trick is staying on top of when your CDs mature in order to maximize your earning potential.

Are you ready to take advantage of a CD ladder? We’ve got CD options ranging from 13 months to 60 months with competitive rates to maximize your investment. Follow the link below to take a look at our options and get started.


Get Started on Your Own CD Ladder


The credit union is federally insured by the NCUA. Additional insurance of up to $250,000 on your savings accounts is provided by Excess Share Insurance Corporation, a licensed insurance company.
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