What a CD ladder is
A CD ladder splits one deposit across several CDs with different terms, so that one of them matures at each step instead of all of the money being locked up until a single date. Each CD is called a rung, and the time between maturities is the gap.
How to calculate a CD ladder
Each rung is a separate CD, so its value at maturity is its amount × (1 + APY)years. Add up the rungs to get the ladder total. Here is $25,000 split into 5 rungs of $5,000 with a 12-month gap, at example rates only:
| Rung | Term | APY | Value at maturity |
|---|---|---|---|
| 1 | 12 mo | 3.50% | $5,175.00 |
| 2 | 24 mo | 3.75% | $5,382.03 |
| 3 | 36 mo | 4.00% | $5,624.32 |
| 4 | 48 mo | 4.10% | $5,871.82 |
| 5 | 60 mo | 4.20% | $6,141.98 |
The total interest is $3,195.16 and the total returned is $28,195.16. This assumes no reinvestment: each rung is held to its own maturity, and what happens to the money afterwards is not modelled. For value at maturity on a single deposit, use the CD calculator.
Choosing rungs and gaps
The calculator takes 2 to 10 rungs and a gap of 3, 6 or 12 months, so the longest rung is the number of rungs × the gap. It splits the total equally unless you choose custom amounts, which must add up to the total. Each rung needs its own APY, because longer terms often have different rates. The blended APY in the results is an amount-weighted average, a summary figure rather than a yield; see the methodology page. To see what cashing out a rung early could cost, use the CD early withdrawal penalty calculator.