CD Ladders Made Easy: Here's a Simple Plan That Works

A "CD ladder" might sound like some complex investing strategy, but it's actually very simple -- and profitable.

And with interest rates on the decline, now is the perfect time to lock in a high APY with CDs before it's too late.

Here's your no-nonsense guide to building a CD ladder in 2025, and how it can help you maximize your savings for years to come.

What is a CD ladder?

CDs are a type of savings account where you deposit your money for a set term and earn a fixed interest rate (say, a 4.00% APY for 12 months).

Put simply, building a CD ladder means opening several certificates of deposit (CDs) with different term lengths. That way, you get regular access to a portion of your money while making sure it's still racking up interest.

Then, as each CD matures, you can either withdraw the money or reinvest it into a new CD to keep the ladder going.

CD ladders are great because:

• They offer a guaranteed rate of return.
• They keep money coming back to you at regular intervals.
• They offer flexibility -- when a CD matures, you can either add to the ladder by reinvesting it or take your cash (and earnings) back.

An example of a simple CD ladder

Let's say you have $10,000. You could build a CD ladder like this:

• $2,000 in a 1-year CD
• $2,000 in a 2-year CD
• $2,000 in a 3-year CD
• $2,000 in a 4-year CD
• $2,000 in a 5-year CD

Each year, one CD matures. You can either withdraw your cash or roll it into a new 5-year CD, which will keep the ladder going and give you a mix of high interest and regular access to your cash.

Things to consider before opening CDs

Here are a few things to think about before you build your CD ladder:

• Early withdrawals cost you: Pulling money out before a CD matures usually triggers a penalty. (There are CDs that offer no-penalty early withdrawals, but they tend to have lower APYs.)
• Planning ahead matters: Don't deposit money you may need in the short term, like your emergency savings. CD laddering works best if you don't need the cash right away.
• Reinvesting takes discipline: You'll need to keep reinvesting in CDs if you want to keep the ladder going.

Build your ladder and watch your money climb

Saving with CDs is one of the best ways to protect your cash against falling interest rates. And building a CD ladder is the perfect way to keep your money flexible while you do it.

The most important thing is to act before rates fall. By saving with longer-term CDs now -- and making them part of your larger savings strategy -- you give yourself a great combination of flexibility and earnings.

Ready to get started? See our full list of the best CDs available today to learn more.