CD LADDERING 101

Step up to a better savings strategy

Learn how you can build a CD ladder and why it could be a great way to keep your money safe and growing.

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Step-by-step

CD ladder basics

A CD ladder is a strategy in which you open multiple CDs that mature at staggered intervals. This can help you compound your earnings, generate a steady stream of income and gain consistent access to your money.

Step 1 — Distribute your money equally into CDs with increasing terms

For this example, we’re building a 5-year ladder using a $100,000 initial deposit. That means, you would open five CDs with $20,000 each.

Step 2 — Roll over your principal and interest

Each year, when one of your CDs matures, roll over the funds into a new 5-year CD.

Step 3 — Continue building your ladder

Continue this strategy as each of your CDs roll over.

Step 4 — Take advantage of your ladder

Starting in year six, you’ll annually have access to funds from your rolled over 5-year CDs.

Create your ladder

See what your money can do

CD laddering is a savings strategy that staggers CD maturities to potentially maximize your investment. Short-term CDs allow you to access funds sooner, while longer-term CDs typically have higher rates and earnings — giving you the best of both worlds.

In the know

Quick answers to common questions

Like all CDs, including those within a CD ladder structure, your principal deposit will only become available once your CD matures. Interest can be withdrawn at any time, but doing so will reduce your future earnings and APY because you lose the advantage of compounding interest.

Keep in mind, because your CDs will automatically renew at maturity for the same term and at the then current interest rate and APY, you will need to set maturity instructions for each CD online or by phone to continue building your ladder.

You will need to set the maturity instructions for each of your CDs online or by phone to continue building your ladder. Otherwise, each CD will automatically roll over at maturity for the same term and at the then current interest rate and APY.

For example, if you wish to set up a ladder that runs for 6 years, for each of your 1-, 2- and 3-year CDs, you’ll need to provide maturity instructions to roll each of them over into new 3-year CDs upon maturity.

Yes, like all deposit accounts at TIAA Bank, our CDs, including those in a CD ladder structure, are FDIC insured up to the standard $250,000 per ownership category. For more information, visit our FDIC Insurance page online.

The CDs in your CD ladder are not taxed any differently from any other deposit account. This means that the interest you earn from CDs is considered taxable income by the IRS, unless you hold the CD in a retirement account such as an IRA. For tax purposes, we will send you an annual 1099-INT listing the interest income from the CD. Please consult a tax advisor for any questions you may have.