How to Build a CD Ladder
A ladder is how you stop guessing where rates go next.
At a glance
Figures checked 1 Sep 2026
Typical APY
Blended across the rungs
Minimum balance
Depends on the bank
Fees
Penalties apply only if you break a rung early
Access to cash
One rung matures each period
Protection
FDIC or NCUA insured to $250,000
What to take away
- Split the money into equal rungs across staggered maturities.
- As each rung matures, reinvest at the longest term to keep the ladder rolling.
- You get regular access without sacrificing the longer-term rate on the whole balance.
Divide $25,000 into five $5,000 CDs maturing at one, two, three, four and five years. Each year one matures. Reinvest it into a new five-year CD and the ladder maintains itself, with one rung always within twelve months of coming free.
| Year | Action |
|---|---|
| 1 | Buy 1, 2, 3, 4 and 5-year CDs |
| 2 | 1-year matures → buy a new 5-year |
| 3 | 2-year matures → buy a new 5-year |
| 4 | 3-year matures → buy a new 5-year |
| 5 | 4-year matures → buy a new 5-year |
After the initial cycle every rung is a five-year CD, one matures annually, and you never had to forecast interest rates.
Treasury bills work the same way and are exempt from state and local income tax, which matters in high-tax states.
Common questions
It gives up a little yield in exchange for regular liquidity and protection against locking everything in at a rate peak or trough.