Build a CD ladder with our free calculator. Compare 3-month to 5-year CD rates, see total interest earned, and optimize your maturity schedule.
A CD ladder splits your lump sum across multiple certificates of deposit with staggered maturity dates. Instead of locking $50,000 into a single 5-year CD, you divide it into equal portions — typically five — and buy CDs maturing at 1, 2, 3, 4, and 5 years.
When the first CD matures after 12 months, you reinvest it into a new 5-year CD. Repeat each year. After the initial build-out period, you have one CD maturing every year, all at the longest (highest-rate) term. You get the yield of long-term CDs with the liquidity of annual access.
This structure protects you in both rate environments:
Use these inputs to calculate your ladder's projected earnings:
| Input | Your Value | Example |
|---|---|---|
| Total deposit | — | $50,000 |
| Number of rungs | — | 5 |
| Per-rung amount | — | $10,000 |
| Term intervals | — | 12, 24, 36, 48, 60 months |
Here's what a $50,000 ladder looks like using competitive rates available right now from online banks and credit unions:
| Rung | Term | APY | Deposit | Interest Earned at Maturity |
|---|---|---|---|---|
| 1 | 12 months | 4.25% | $10,000 | $425 |
| 2 | 24 months | 4.10% | $10,000 | $838 |
| 3 | 36 months | 4.20% | $10,000 | $1,312 |
| 4 | 48 months | 4.35% | $10,000 | $1,858 |
| 5 | 60 months | 4.50% | $10,000 | $2,462 |
| Total first-cycle interest | $6,895 | |||
After the first cycle, each maturing rung reinvests into a 60-month CD. Assuming rates hold near 4.50%, each reinvested $10,000 rung earns approximately $2,462 per cycle. Over the full first five years, your $50,000 generates roughly $6,895 in interest. Over 10 years with reinvestment, total earnings approach $15,000–$17,000 depending on rate movement.
Compare this to a high-yield savings account at 4.00% APY: $50,000 earns $2,000 per year, but that rate resets with every Fed decision. The ladder locks in today's rates for years.
These are the top nationally available CD rates as of May 2026:
| Term | Top APY | Typical Range | Minimum Deposit |
|---|---|---|---|
| 6 months | 4.40% | 4.00–4.40% | $500–$1,000 |
| 12 months | 4.50% | 4.00–4.50% | $500–$1,000 |
| 24 months | 4.25% | 3.75–4.25% | $500–$2,500 |
| 36 months | 4.20% | 3.70–4.20% | $1,000–$2,500 |
| 48 months | 4.35% | 3.80–4.35% | $1,000–$5,000 |
| 60 months | 4.50% | 3.90–4.50% | $1,000–$5,000 |
Note: The current rate environment features an inverted or flat yield curve for CDs — short-term rates are competitive with or even higher than long-term rates. This is unusual and reflects the market's expectation of future Fed rate cuts. It makes shorter-term ladders (3-rung) particularly attractive right now.
Best for: Money you might need within 18 months — house down payment savings, emergency fund overflow, or short-term goals.
With $30,000 split three ways at current rates (4.30%, 4.50%, 4.20%), you earn approximately $1,230 in interest over 18 months. You access one-third of your funds every 6 months.
Best for: Core savings strategy for money you don't need for at least a year. This is the most popular ladder structure and the one described in the calculator above.
With $50,000, you earn roughly $6,895 over the first five years. After the build-out, every rung earns the 5-year rate.
Best for: Maximizing yield on a large sum ($100,000+) you won't need for several years — perhaps an inheritance, business sale proceeds, or Roth conversion bridge money.
With $70,000 split into $10,000 rungs across 1 through 7 years, you maximize exposure to the longest-term rates. However, 6- and 7-year CDs are less commonly offered and may require brokered CDs through a brokerage account.
| Option | Current Yield | Liquidity | FDIC Insured | Rate Lock |
|---|---|---|---|---|
| CD Ladder (5-rung) | 4.00–4.50% | Annual (after build) | Yes, $250K per bank | Yes |
| High-Yield Savings | 4.00–4.25% | Instant | Yes, $250K | No (variable) |
| Treasury I-Bonds | 3.11% (current) | 1-year lockup | Gov't backed | 6-month resets |
| Treasury Bills (6-mo) | 4.20% | At maturity | Gov't backed | Yes |
| Money Market Fund | 4.10–4.30% | Next day | No (SIPC) | No |
When a CD ladder wins: You want guaranteed returns above savings account rates and can commit to a 1+ year horizon. The rate-lock is the key advantage — if the Fed cuts rates in late 2026 or 2027, your ladder's existing CDs keep earning today's higher rates while savings accounts and money market funds drop immediately.
When it doesn't: If you need instant access to all your funds, a high-yield savings account is better. If you're investing for 10+ years, equities historically return 10.5% nominal (7% real) — see our compound interest calculator to model long-term growth.
Every CD has an early withdrawal penalty (EWP) if you cash out before maturity. Typical penalties:
This is why the ladder structure matters — you always have a CD maturing soon, so you rarely need to break one early. If you think you might need emergency access, consider banks like Ally or Marcus that offer relatively mild EWPs (60–150 days of interest).
Some banks offer no-penalty CDs, but these typically pay 0.25–0.50% less APY. For most people, a properly structured ladder eliminates the need for no-penalty CDs.
CD interest is taxed as ordinary income in the year it's earned (or credited, for multi-year CDs — check your 1099-INT). At the 2026 federal brackets, here's the tax hit on $2,000 of CD interest at various income levels:
State income tax adds 0–13% on top, depending on your state. If you're in a high tax bracket, consider holding CDs in a tax-advantaged account. You can hold brokered CDs inside an IRA — build your ladder within a Roth IRA and the interest grows tax-free. If you're self-employed, your Solo 401(k) brokerage window may also support brokered CDs.
The Fed's current target rate is 4.00–4.25%, down from the 5.25–5.50% peak in 2023–2024. Markets are pricing in 1–2 more cuts through the end of 2026, which would push the target to 3.50–3.75%.
If that forecast holds, today's CD rates are near the top of what you'll see for the next several years. Locking in a 4.50% 5-year CD now means you earn that rate even after savings accounts drop to 3.00–3.50%.
The case for acting now: Every month you wait in a savings account instead of a CD ladder, you're earning a similar rate today but lose the rate-lock protection when cuts come. The opportunity cost of waiting isn't the current rate differential — it's the future rate differential you miss by not locking in.
If you're sitting on cash earmarked for a goal 2+ years out — like a down payment (run the numbers with our home affordability calculator) or a child's education — a CD ladder started in mid-2026 locks in rates before the next wave of cuts.
Most online banks require $500–$1,000 minimum per CD. A basic 3-rung ladder requires $1,500–$3,000, and a 5-rung ladder requires $2,500–$5,000 at minimum. However, the strategy works best with $10,000+ because the absolute dollar return on small amounts ($50 interest on a $1,000 one-year CD) may not justify the effort of managing multiple accounts. If you have under $5,000, a high-yield savings account at 4.00%+ is simpler and nearly as effective.
You have two options: reinvest into a new CD at the longest term in your ladder (recommended to maintain the structure), or take the cash if you need it. Most banks give you a 7–10 day grace period after maturity to decide. If you do nothing, the bank auto-renews at their current rate, which is rarely the best available. Set a calendar reminder 1 week before each maturity date to shop rates and move your money to the highest-paying option.
Yes — this is actually the best time to build one. Current 5-year CDs at 4.50% APY lock in today's rate for the full term. If the Fed cuts to 3.50% by year-end as expected, savings accounts will drop immediately but your CD ladder keeps earning the higher locked rate. The whole point of a ladder is rate-change protection. Starting now captures peak rates on the longer-dated rungs while maintaining rolling access to your money.
If you have IRA funds you want in low-risk investments, yes. Brokered CDs (available through Fidelity, Schwab, and Vanguard) can be held inside traditional or Roth IRAs. The advantage: CD interest in a Roth IRA is completely tax-free, and in a traditional IRA it's tax-deferred. This eliminates the biggest downside of CDs — ordinary income taxation on interest. Use our Roth conversion calculator to see if converting to Roth first makes sense for your situation.
Both are safe and government-backed (CDs via FDIC, Treasuries directly). Treasuries have two advantages: no early withdrawal penalty (you can sell on the secondary market) and state tax exemption on interest. CDs currently offer slightly higher APYs (4.50% vs. 4.20% for comparable terms) and are simpler to manage through a bank. If you're in a high state-tax state like California or New York, the Treasury's state-tax exemption may make its lower APY effectively equivalent or better. For most people, CDs are easier; for amounts over $250,000 or high-state-tax situations, Treasuries win.
This content is for educational purposes only and does not constitute financial advice. Consult a qualified financial advisor before making investment decisions. CD rates referenced are based on nationally available rates as of May 2026 and are subject to change.
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