Liquidity Schedule
| Rung | Deposit | Maturity Date | Est. Interest |
|---|
Professional User Guide
1. Build Your Ladder
Divide your total investment by the number of rungs. Each rung represents a CD with a different maturity (e.g., Year 1, Year 2, etc.).
2. Choose Your Term Lengths
Compare current rates across 1- to 5-year terms before you build. Longer terms usually pay more, and a balanced ladder lets you capture them without locking up all your cash at once.
3. Maintain Liquidity
As each CD matures, you can reinvest it into a new long-term CD (at the end of the ladder) to maintain the rotation and capture the highest available rates.
4. Reinvest or Cash Out
Every year you decide: roll the matured rung into a new top CD to keep earning, or take the cash if your plans changed. The liquidity schedule above shows exactly how much frees up annually.
Frequently Asked Questions
What is a CD ladder?
A CD ladder is a strategy where you divide your investment into equal parts and invest them in CDs with different maturity dates (e.g., 1, 2, 3, 4, and 5 years).
Why use a CD ladder?
It allows you to take advantage of higher interest rates on long-term CDs while still having a portion of your money become available every year.
How do I build a CD ladder?
Decide your total deposit and how many rungs you want (five is common). Split the money evenly and open CDs maturing in 1, 2, 3, 4, and 5 years. As each CD matures, roll it into a new longest-term CD. The calculator above shows your blended yield and annual liquidity instantly.
How many rungs should a CD ladder have?
Most savers use a 5-year ladder with five rungs, giving one maturity per year. A short mini-ladder (3, 6, 9, 12 months) suits near-term cash, while a 7-10 rung ladder locks in rates for longer. More rungs mean smoother liquidity but can lower your average yield.
Is a CD ladder better than a high-yield savings account?
A CD ladder usually pays a higher, locked-in rate and protects you if rates fall, but your money is tied up until each rung matures. A high-yield savings account stays fully liquid yet its rate can drop anytime. Many savers keep an emergency fund in savings and ladder the rest.
Are CD ladders safe?
Yes. CDs at FDIC-insured banks or NCUA-insured credit unions are protected up to $250,000 per depositor, per institution. A CD ladder carries no market risk - the main trade-off is an early-withdrawal penalty if you cash out before maturity.
What happens when a CD matures?
When a rung matures you receive the principal plus interest. To keep the ladder going, reinvest it into a new longest-term CD. If you need the cash, simply take that year's payout - the built-in annual access is the whole point of laddering.
Is CD ladder interest taxable?
Yes. CD interest is taxed as ordinary income in the year it is credited, even if you do not withdraw it. Your bank issues Form 1099-INT for any year you earn $10 or more. Holding CDs inside an IRA can defer or shelter that tax.