CD ladder calculator
A CD ladder splits a deposit across multiple maturities — typically 1, 2, 3, 4, and 5 years. Once established, one rung matures every year, giving you regular access to principal without early-withdrawal penalties. The trade-off: longer-term CDs typically pay higher rates, so all-in-the-longest earns more — at the cost of zero liquidity for 5 years. This calculator surfaces the exact dollar give-up (or, when the yield curve is flat or inverted, the dollar pick-up).
Last updated 2026-05-13
- All-in 5-yr CDhighest yield, zero access
- $63,209+$253 vs ladder
- Ladder (this strategy)yield + annual liquidity
- $62,956—
- All-in 1-yr rollingbest access, lowest yield
- $63,209-$253 vs ladder
MethodologyHow the ladder works, when it wins, and what we don't model
How the ladder works, when it wins, and what we don't model
The mechanic:split your deposit equally across N rungs. A 5-rung ladder of $50,000 puts $10,000 each into 1-year, 2-year, 3-year, 4-year, and 5-year CDs. Hold each to maturity. As each matures, you can either take the cash or roll it into a fresh 5-year CD at the current rate — which is what builds the steady-state "running ladder" where $10k+ is accessible every 12 months going forward.
Why steady-state assumes reinvestment at the longest rate: in a running ladder, once your shortest rung matures you replace it with a fresh longest-term CD. Year 2's rung becomes the new 4-year-old CD, year 3 becomes the new 3-year-old CD, and so on. The valuation here grows each rung at its own rate until maturity, then at the longest rate for the remaining horizon years. This is the cleanest representation of the steady-state ladder.
The yield-curve shape determines who wins:
Upward curve(long > short, the most common shape): all-into-longest earns more total yield. Ladder gives up some yield in exchange for annual liquidity windows. The give-up is usually 0.1-0.5% of effective APR — concrete dollar number shown above.
Flat curve (long ≈ short, where we are in early-mid 2026): the give-up is near zero. Ladder is essentially a free upgrade — you get annual liquidity at no yield cost. This is when laddering makes the most sense.
Inverted curve(short > long): ladder can actually beat all-into-longest because the short rungs earn higher rates than the long lump-sum would. Rare but real — happens around expected Fed rate cuts. When it occurs, ladder wins on both yield AND liquidity. No trade-off.
Comparison against rolling 1-year CDs:the shortest-only-rolled strategy assumes the 1-year rate stays constant forward. That's never quite true — rates move. The calculator surfaces the comparison anyway because it's the most common alternative strategy and the shape of the answer doesn't depend much on the specific future-rate assumption.
What we deliberately don't model:tax treatment (interest is taxed annually as ordinary income regardless of strategy — puts CDs at a disadvantage to municipal bonds and Treasuries in high brackets); early-withdrawal penalties (3-6 months of interest, model them only if you actually think you might break a CD); brokered CDs vs bank CDs (FDIC coverage limits, secondary-market liquidity); inflation drag (a 4.5% CD nominal is more like 2% real after typical inflation); callable CDs (the bank's option to redeem early — usually a yield premium that's not worth it).
When CDs make sense at all:emergency fund tier above a high-yield savings buffer; known future expense 1-5 years out (down payment, kid's college first year, planned car purchase); fixed-income portion of an allocation for someone uncomfortable with bond-fund NAV fluctuations. CDs are simple, FDIC-insured, mechanically predictable — that simplicity is the product.