Your Bank > Education and Advice > CNB University

What are the benefits of laddering Certificates of Deposit?

M Hill 2017
Michelle Stevens
Vice President, Manager - Brockport Community Office
[email protected]
(585) 851-0900 x42820

Saving money is essential for achieving financial goals, but where you save matters just as much as how much you save. One strategy gaining popularity is Certificate of Deposit (CD) laddering. Let's explore what CD laddering is and how it can help you make the most of your hard-earned dollars.

What is CD Laddering?

CD laddering is a smart savings strategy that involves spreading your savings across multiple certificates of deposit with staggered maturity dates. Instead of putting all your money into a single CD, you divide it into equal parts and invest each part into CDs with different maturity periods.

How Does CD Laddering Work?

Imagine you have $10,000 to invest. Instead of depositing the entire amount into a single CD, you could split it into four $2,500 portions and invest each in CDs with different term lengths—say, one year, two years, three years, and four years. As each CD matures, you can reinvest the funds into a new CD with the longest term, effectively creating a ladder of CDs.

Benefits of CD Laddering:

Flexible Access to Funds: CD laddering provides you with regular access to a portion of your savings as CDs mature at different intervals. This flexibility means you're not tying up all your money for an extended period, unlike with a single long-term CD.

Optimized Interest Rates: By spreading your savings across CDs with different maturity dates, you can take advantage of higher interest rates typically offered by longer-term CDs. At the same time, you maintain access to a portion of your funds in shorter-term CDs.

Mitigated Interest Rate Risk: CD laddering helps reduce the risk of locking in your money at a low interest rate for an extended period. As each CD matures, you have the opportunity to reinvest at prevailing rates, potentially increasing your overall returns over time.

Diversification: Diversification is key to a healthy financial portfolio. With CD laddering, you're spreading What are the benefits of laddering Certificates of Deposit? your investments across multiple CDs with varying maturity dates. This diversification minimizes the impact of interest rate fluctuations and market volatility on your savings.

Getting Started with CD Laddering:

Set Clear Savings Goals: Determine what your financial objectives are and the timeline for achieving them.

Consider Ladder Length: Decide on the number of CDs and the length of the ladder that aligns with your financial goals and needs.

Stay Informed: Keep an eye on interest rates and market conditions to make informed decisions when reinvesting maturing CDs.

CD laddering offers a balanced approach to savings, providing liquidity, optimizing interest rates, and reducing risk through diversification. By implementing a CD ladder, you can grow your savings steadily while maintaining access to your funds when you need them. Take advantage of this smart savings strategy to achieve your financial goals with confidence.

To learn more about our current CD offerings, visit or stop into one of our bank offices today!

This material provided by Michelle Stevens.