How to Build a CD Ladder

Use multiple CDs with staggered maturity dates to earn higher rates while keeping cash accessible every few months.

  1. Decide how much to ladder and your time horizon. Start by choosing the total dollar amount you want to put into CDs — this should be money you won't need for at least 1–2 years. Then pick your overall timeline: do you want money available every 3 months, every 6 months, or every year? A typical ladder spans 1 to 5 years. Example: $10,000 over 5 years means you might split it into five $2,000 CDs.
  2. Open CDs with staggered maturity dates. Buy multiple CDs with different maturity lengths — one that matures in 1 year, one in 2 years, one in 3 years, and so on. All CDs opened on the same day, but they mature at different times. This stagger is the whole point: you avoid the temptation to lock everything up for 5 years just to get the highest rate.
  3. Use the highest rate available for your longest rung. Longer-term CDs typically pay higher interest rates than shorter ones. As of 2026, a 3-month CD might pay 3.5–4% APY, while a 5-year CD might pay 4.2–4.8% APY. Put your longest-maturity CD at the highest rate you can access; that money earns the most. Shorter-term CDs will pay less, and that's okay.
  4. Reinvest maturing CDs at the longest available term. When your first CD matures, you'll receive the principal plus interest. Reinvest that lump sum into a new CD with the longest maturity term available at that time — typically 5 years. This keeps your ladder intact and ensures you're always getting top-tier rates on the longest-term rung. Never just leave the cash in a checking account or you'll break the system.
  5. Handle early-withdrawal penalties if you need cash. CDs usually penalize you if you withdraw before maturity — typically 3–6 months' worth of interest. Factor this into your plan. If you might need the money within your ladder window, keep a separate emergency fund in a high-yield savings account (not in the ladder). The ladder works best when the money truly stays locked until each maturity date.
  6. Track your maturity dates and set calendar reminders. Write down (or set phone alerts for) each maturity date. A few weeks before each CD matures, compare current rates and decide whether to reinvest at your primary bank or move the money elsewhere if rates have changed. Don't miss the reinvestment window or your cash will sit idle, earning next to nothing.