CD Ladder Calculator (US Certificate of Deposit)

CD Ladder Strategy Guide

What a CD Ladder Solves

Certificates of Deposit (CDs) offer higher yields than savings accounts but lock your money up for the term — withdraw early and you forfeit several months of interest. A CD ladder solves the liquidity problem: split your money across CDs with staggered maturity dates. Example with $50,000 across 5 years: $10,000 each in 1-year, 2-year, 3-year, 4-year, 5-year CDs. Every year, one rung matures — you can spend it, or reinvest in a new 5-year CD. After year 5, all rungs are 5-year CDs (highest typi

FDIC Insurance Limits

FDIC insures up to $250,000 PER DEPOSITOR, PER BANK, PER OWNERSHIP CATEGORY. A single-name CD account: $250,000 covered. Joint account: $250,000 PER co-owner, so $500,000 covered. Multiple ownership categories at same bank: individual + joint + trust can each receive $250k coverage. For households with over $250k in CDs: spread across multiple banks (Marcus, Ally, Discover, Capital One 360, Synchrony all offer competitive rates and separate FDIC coverage), OR use CDARS network (banks split depos

Early Withdrawal Penalties

Each CD has an early withdrawal penalty: typically 3 months interest on short CDs (under 1 year), 6 months on 1-3 year CDs, 12 months on 4-5 year CDs. Some 'no-penalty CDs' (Ally, Marcus) allow early withdrawal without penalty but offer lower rates. Penalty cost example: $10,000 in a 5-year CD at 4% withdrawn at month 24. Forfeit 12 months interest = $400. Effective return for 2 years: ($800 earned - $400 penalty) / $10,000 / 2 years = 2% effective. Strategy: if you might need money sooner, use

When CDs Beat (or Lose to) Alternatives

CDs vs High-Yield Savings (HYSA): HYSA rates float with Fed Funds (typically tracks Fed within 0.5%). CD rates lock at issuance. When rates expected to FALL, lock in CDs. When rates expected to RISE, stay liquid in HYSA. CDs vs Treasury bills/I-Bonds: T-bills exempt from STATE income tax (HUGE in CA, NY, NJ — adds 5-13% effective yield). I-Bonds inflation-protected but limited to $10k/year purchase. CDs vs bond funds: bond funds lose principal when rates rise (no maturity date); CDs projected re