CD Ladder Calculator

Calculate the amount of interest earned on a CD ladder when all of its component CDs reach maturity at the ends of their terms.


CD Ladder 5-Year Return:

Total Value:
Interest Earned:

Single CD Comparison

Total Value:
Interest Earned:

*fixed-term, 12-month CDs rolled over annually over 60 months

CD Ladder Balance by Year

CD Ladder Structure

CD #1:

· $2,500 deposit in 6-month CD
· roll into 24-month CDs on maturity

CD #2:

· $2,500 deposit in 12-month CD
· roll into 24-month CDs on maturity

CD #3:

· $2,500 deposit in 18-month CD
· roll into 24-month CDs on maturity

CD #4:

· $2,500 deposit in 24-month CD
· roll into 24-month CDs on maturity

This calculation is based on widely-accepted formulas for educational purposes only - this is not a recommendation for how to handle your finances, and it is not an offer to lend or invest. Consult with a financial professional before making financial decisions.
Learn how we calculated this below

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What is a CD Ladder?

A certificate of deposit, or CD ladder is a structured savings product created by an individual CD investor to meet his or her own specific savings needs. A CD ladder is composed of several CDs that have varying maturity dates and can also have varying terms.

Each CD can be considered a “rung” on your CD ladder, and each one gets you closer to your overall savings goal!

A typical CD ladder might consist of a total investment of $5,000, spread over five CDs that mature at staggered intervals of one year, two years, three years, four years, and five years. This means that each year, $1,000 of your $5,000 investment matures, which can then be rolled over into a new five-year CD that pays a higher rate than the shorter maturities.

The overall interest rate that you receive with a CD ladder is a “blended” rate, which is an average of the rates of the five CDs in your ladder. As you switch from shorter to longer maturities, your interest rate will usually increase, even if rates otherwise stay the same. If rates go up, your blended rate increases; if rates go down, your blended rate will decrease, but it will do so more slowly than if your entire CD investment matured at the same time.

The Benefits (and Drawbacks) of a CD Ladder

CD laddering has some benefits and drawbacks that are worth noting.

The Benefits of Investing in a CD Ladder

  • Improved access to your money
  • Higher rates than a regular savings account
  • Your CDs are insured
  • You can take advantage of a rising-rate environment
  • You can minimize the effects of a falling-rate environment
  • CD ladders offer you a guaranteed rate of return
  • A CD ladder gives you total flexibility
  • A CD ladder gives predictability to your savings
  • A CD ladder gives you both higher rates and liquidity

The Drawbacks of Investing in a CD Ladder

  • CD ladder rates can go down
  • You will incur penalties if you must access your money early
  • You are responsible for maintaining your CD ladder’s multiple maturity dates
  • Your CD ladder might not keep up with the rate of inflation

How to Build a CD Ladder

You can build a CD ladder in a few steps.

Step 1:

List the amount of money you will be investing in your CD ladder. The more you can invest, the more interest your CD ladder will make.

Step 2:

List the intervals at which you want your CDs to mature (every 3 months, 6 months, 12 months, etc.). The longer the interval, the higher the rate you can earn on the CDs in your ladder. Although you may be able to find some CDs that have no minimum deposit, most CDs do require a minimum deposit of at least $500 to $1,000. Keep this in mind when dividing up your CD ladder into individual CDs.

Step 3:

List how many years out you wish your CD ladder to last. The longer it runs, the more you earn!

Step 4:

Plan out the CDs you will need to buy so that they will mature at the intervals you need. Shop around at different financial institutions to get the best rates available.

Step 5:

Purchase the first batch of CDs.

Step 6:

Renew, extend, and maintain your CD ladder as time passes. You will need to keep track of this yourself.

Step 7:

Watch your interest roll in!

How to Calculate CD Laddering Interest

By calculating the interest that you will receive from each individual CD in your CD ladder and then adding them all together, you can determine the total amount of interest that your CD ladder will produce as all of its CDs mature.

While the basic rate does not include any compounding of the CD’s interest, the APY rate includes the effect of compounding interest.

This means that the higher APY rate represents your actual rate of return. The interest on most CDs is compounded on either a daily or a monthly basis.

To calculate the interest generated by your CD ladder, you can simply enter the relevant information for each CD in your CD ladder into the handy calculator above.

CD Interest Formula

If you’d like to do the math yourself, then you need to use the compound interest formula:

A = P \times \left (1 + \frac{r}{n} \right )^{nt}

A = future value
P = present value (initial deposit)
r = interest rate (basic rate, not APY)
n = number of times interest is compounded per year
t = CD term in years

You can also use our compound interest calculator for this.

Calculating the Total Interest on Your CD Ladder

Once you have calculated the interest on each of the CDs in your ladder, you simply add together the interest from each of the CDs:

T = I_{1st\ CD} + I_{2nd\ CD} + I_{3rd\ CD} + … + I_{Remaining\ CDs}

I = Interest generated by each CD in your CD ladder
T = Total interest from all CDs in your CD ladder

Calculating the Blended Interest Rate on Your CD Ladder

To calculate the blended interest rate that is being produced by your CD ladder, you add each of the individual CD’s APY interest rates together and divide that result by the number of CDs in your CD ladder:

BR = \frac{R_{1st\ CD} + R_{2nd\ CD} + R_{3rd\ CD} + … + R_{Remaining\ CDs}}{\#\ of\ CDs}

R = APY interest rate on each CD in your CD ladder
BR = Blended rate for all the CDs in your CD ladder

Frequently Asked Questions

What is a certificate of deposit?

A CD is a savings product sold by banks and credit unions (where they are called Share Certificates). In exchange for leaving the principal amount in the financial institution for the term of the CD, you receive an interest rate on the principal that is typically higher than you would get in an ordinary savings account.

What is a CD ladder?

A CD ladder is a structured savings product that you create to meet your individual savings needs. A CD ladder is composed of several CDs that have staggered maturity dates. The CDs can also have varying terms.

As each CD matures, you can either cash it in or roll it over into another CD with either the same or a different maturity date. A CD ladder is designed to provide you with a higher yet fully-insured rate of return that also meets your personal liquidity needs, whether that is every few months, annually, or even longer-term.

How many CDs should be in a CD ladder?

This also depends on how much you have to invest and how long you can invest your money without needing to access it. Some people may be able to let the CDs in their CD ladders mature once per year or longer, while others may need to have access to a matured CD once every few months.

With a CD ladder, you can customize the number and maturity dates of your CDs. We suggest consulting a financial professional when making this decision.