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CD guide

CD ladders explained

Staggered maturities, in plain language, with a link to the calculator.

Photo: CEphoto, Uwe Aranas / Wikimedia Commons, CC BY-SA 3.0

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A CD ladder is a group of certificates of deposit that mature on a staggered schedule. As each rung matures, the proceeds can be held as cash or placed into a new certificate at the long end of the ladder.

How the rungs work

A simple four-rung ladder of one-year CDs, started in the same week, would have one certificate maturing every three months once the first year has passed: a 3-month, a 6-month, a 9-month and a 12-month CD at the start, or four 12-month CDs opened a quarter apart. After the first cycle, each maturing rung can be placed into a new 12-month CD, so the ladder keeps a regular maturity schedule.

The pattern can be built with other terms (for example 4-week through 52-week T-bills, or a mix of CD terms). The ladder calculator runs the arithmetic for a schedule you enter. Figures on that tool come from official Treasury and FDIC series, with the as-of date shown on the page.

What a ladder does and does not do

  • It spreads maturities over time, so not all of the money is tied to a single date or a single rate.
  • It does not remove early-withdrawal penalties on bank CDs, or market-price changes on brokered CDs and T-bills exited before maturity.
  • It does not change FDIC or Treasury coverage rules. Bank and brokered CDs count toward the FDIC limit at the issuing bank; Treasuries are not FDIC-insured. See FDIC deposit insurance.

Taxes and where to hold the rungs

CD interest is taxable at the federal, state and local level. Treasury bill, note and bond interest is federally taxable and exempt from state and local income tax. The after-tax comparison and the T-bill vs CD table show official rates on that basis. Brokered CDs can sit in one brokerage account next to bills; bank CDs sit at the issuing bank. See brokered CDs explained.

Current official rates

Compare the latest Treasury auction yields and FDIC national CD averages on rates this week and where to park cash. Those pages carry the as-of dates. A related schedule for a cash reserve is on the emergency fund ladder page.

Research tools

To follow yields, funds and your own holdings in one place, Stock Rover offers research and portfolio tools.

Affiliate disclosure. The Stock Rover link below is an affiliate link. YieldDocket may earn a commission if you sign up, at no extra cost to you. It never changes the data we publish. How we get paid. Educational data, not investment advice.

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Frequently asked questions

What is a CD ladder?

A set of certificates of deposit with staggered maturity dates, so that one rung matures on a regular schedule and can be held as cash or placed into a new CD.

Is a ladder the same as an emergency-fund schedule?

The structure is similar: amounts come due on a schedule. An emergency-fund ladder is one use of that structure. A walkthrough of that use is on the emergency fund ladder page. This page describes the structure itself.

Do rungs have to be bank CDs?

The same staggered-maturity idea can be built with bank CDs, brokered CDs or Treasury bills. Coverage, taxes and how you exit early differ. Compare official rates on rates this week, and see brokered CDs explained and T-bill vs CD after tax.

Updated · Educational, not investment advice.