Should I Ladder my Certificate of Deposits?

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Blog author: Deb Walker

Certificates of deposit, or CDs, typically have the highest interest rates of government-insured savings products.  This makes CDs attractive for investors who are looking for low-risk investments. 

How does laddering work?

Typically, the longer the term of the CD the higher the investment rate you receive.  By laddering CDs, you stagger your maturity dates over a period of time—typically 3-5 years. 

Using this strategy provides several benefits:

  • You arrange your CD ladder to have cash available at intervals that meet your needs. 

  • You decide how to split the amount of each CD, making your ladder flexible to meet your anticipated needs.

  • And best of all, by stretching your ladder over a longer-term, you could realize higher interest rates versus always staying short term at much lower rates.  

Is there a perfect ladder to use?

Each CD investor’s ladder should follow what their individual anticipated needs are.  If you are concerned about interest rates rising quickly, you could consider shortening your ladder maybe from five years to three years.  If you anticipate rates coming down, maybe a longer term ladder is something to consider.  The perfect ladder should suit your investment time frame as well as your need for income and liquidity.  Once you get your CD ladder established, simply review it as your investments mature and reinvest into terms that meet your needs.

How do I get started? 

Stop into the bank and our Personal Bankers can assist you with setting up an individualized CD ladder.