CD Laddering is a savings strategy that involves spreading a sum of money across multiple Certificates of Deposit (CDs) with different maturity dates. The approach can allow a customer to take advantage of higher interest rates offered by long-term CDs while still having access to some parts of your funds at regular intervals. Laddering gives you some flexibility that could come in handy through changing needs.

How Does CD Laddering Work

1. Open Multiple CDs

   Instead of putting all your money into one CD, you can open several CDs with staggered maturity dates. For example, you might open a CD that matures in one year and another that matures in three, allowing you to invest but have some of your money become available earlier.

2. Enjoy Higher Interest Rates

   Long-term CDs usually offer higher Annual Percentage Yields (APYs) than short-term CDs, although market rates may affect this. By laddering, you can access higher yields on long-term CDs without tying up your funds in one long-term CD.

3. Access Funds Periodically

   Once a CD matures, you can access some of your funds while other long-term CD funds continue earning interest. The funds become available sooner and can be renewed into another CD or used for your financial needs.

How to Build a CD Ladder

Decide the number of CDs you want to include in your ladder and the intervals you desire between the maturity dates. Allocate equal amounts into each CD to give you a balanced ladder. When a CD matures, reinvest the funds into a new CD.

CD laddering is a clever way to maximize savings while maintaining access to funds and flexibility. Cadence Bank can help if you’re interested in opening a CD or building your own CD ladder. Visit a branch or click here to learn more about CDs.

Sources:
https://www.cnbc.com/select/how-to-build-cd-ladder

https://www.forbes.com/advisor/banking/cds/cd-ladder

https://www.consumerfinance.gov/ask-cfpb/the-interest-rate-offered-for-cds-certificates-of-deposit-is-low-is-there-anything-i-can-do-about-that-en-921

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