How this calculator works
A CD ladder solves the classic certificate-of-deposit dilemma: short CDs pay less but stay flexible, long CDs pay more but lock your money away. Instead of choosing, you split your money into equal pieces and buy CDs maturing one, two, three, four, and five years out. Each year a CD matures and you reinvest it into a new longest-term CD. After the ladder is fully built, every piece earns the longer-term rate — yet you still have one CD coming due every single year if you need the cash.
This tool builds that ladder from your total and your chosen number of rungs, applying the rate you enter for each maturity. It shows each rung's value at maturity, your blended yield across the whole ladder, and a year-by-year maturity timeline. Flip on reinvestment and it projects the rolling ladder forward, so you can see how the strategy converges on the top rate over time while keeping you liquid throughout.
The math
Each rung is a CD held to maturity, where APY already reflects compounding:
With reinvestment on, each maturing rung is rolled into a new CD at the longest rung's rate and compounded over your horizon.
- 5 CDs of
$5,000, maturing in years 1 through 5. - Held to maturity, they earn about
$3,180in total interest, for a blended yield near4.07%. - You get access to $5,000-plus every year, not just at the end.
- With reinvestment over 10 years, the ladder grows to roughly
$37,000at an effective yield near4.1%— while staying liquid the whole time.
Acronyms used on this page
- APY
- Annual Percentage Yield
- CD
- Certificate of Deposit
- FDIC
- Federal Deposit Insurance Corporation
When a ladder makes sense
Ladders shine for money you want kept safe and FDIC-insured but not all locked away — a house down payment a few years out, a parked emergency reserve beyond your cash buffer, or conservative retirement income. They protect against reinvestment risk: you're never forced to roll your entire balance at a single moment's rate. The trade-off is modest — slightly more admin than one CD, and CDs still trail stocks over long horizons — so a ladder is a tool for stability and predictable income, not maximum growth.
Frequently asked questions
What is a CD ladder?
Splitting money across CDs with staggered maturities (e.g. 1–5 years). As each matures you reinvest into a new longest-term CD, so you earn longer-term rates while one CD matures every year for access.
Is a CD ladder worth it?
Yes when you want a balance of yield, regular access, and protection from locking in before rates rise. It usually beats all-short-term CDs and stays more flexible than one long-term CD.
What happens when rates change?
One rung matures yearly, so you regularly reinvest at current rates. Rising rates get captured by maturing CDs; falling rates leave your existing long CDs earning their locked-in higher rates. Staggering smooths the risk.
Are the rates here current?
The defaults are illustrative. CD rates change often and vary by bank, so edit each rung to the actual APY your bank or credit union is offering for a precise result.