By “laddering” your certificate account maturities and amounts, you can ensure that cash is available whenever you need it and still take advantage of higher annual percentage yields offered with longer terms. When you “ladder” your certificates you’ll avoid unnecessary penalties that occur from cashing out a certificate before its maturity. Our certificate account ladder calculator examines the benefits of investing in a series of staggered maturities to help you achieve better liquidity in case of emergency or projected need.
To illustrate, consider this example opening five $5,000 certificate accounts instead of one $25,000 certificate account:
- Year One: Open 5 certificate accounts, each for $5,000 for 1, 2, 3, 4, and 5-year terms;
- Year Two: When the 1-year comes due, open another 5-year;
- Year Three: When the 2-year comes due, open another 5-year;
- And so on, so that you essentially have a certificate account maturing every year.
With the above, you’ll have access to some of your money at shorter intervals while still being able to take advantage of higher interest rates offered on longer term certificate accounts.
CD Ladder Calculator
Use this calculator to examine the benefits of investing in a series of Certificates of Deposits with different maturities, also called a CD Ladder. With a CD Ladder, you can benefit from higher interest rates for longer maturities, while achieving better liquidity, rather than investing in a single long-term CD.
Total to invest
- This is the total amount to invest in your CD Ladder.
Amount in each CD
- How much you wish to invest in each CD in your ladder. We use this amount to calculate the number of CDs in the ladder. If the amount that you enter isn't evenly divisible by the total you wish to put into your CD Ladder, we will automatically adjust it up to an evenly divisible amount.
Frequency of Maturing CDs
- How often you would like to have a CD mature. For example, if you choose six months, one of your CDs in your CD ladder will mature every six months.
CDs in your Ladder
- The number of CDs that will be in your CD ladder. Each CD will have a different maturity date, so that one of your CDs will mature at the frequency you specify. This calculator assumes that you redeposit all matured CDs into new CDs that have a term of the longest maturity in your original CD ladder.
Interest is compounded
- The interest earned on your CDs is added to your CD balance at regular intervals. This is called "compounding." This calculator allows you to choose the frequency that your CDs' interest income is compounded. The more frequently this occurs, the sooner your accumulated interest income will generate additional interest. You may wish to check with your local branch or account opening documents to find out how often interest is being compounded on your CDs.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.