CD Ladder Calculator
Build a CD ladder: see per-rung amount, total interest, and annual maturity.
Updated · By Teodor-Cristian Lutoiu
A CD ladder spreads money across CDs with staggered maturities so one matures every year. Once the full ladder is self-rolling, you get access to a fixed chunk of capital annually while the remaining rungs keep earning long-term CD rates on the majority of your balance. At 4% APY, a 5-rung $100,000 ladder produces roughly $4,000/year steady-state plus one rung of principal available annually.
Fill in total amount and APY to see your ladder breakdown.
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How a CD ladder works
A CD ladder is the savings equivalent of not putting all your eggs in one basket — except here the "basket" is a time horizon. Instead of locking all your money into a single 5-year CD at today's rate, you split it into rungs with staggered maturities: 1-year, 2-year, 3-year, 4-year, 5-year.
Why bother?
- Liquidity every year. One rung matures every year. You decide whether to reinvest it or use the cash, without touching the other rungs or paying an early-withdrawal penalty.
- Rate averaging. If rates rise after you buy, next year's rung gets the new higher rate — you're not stuck at today's number for five years. If rates fall, the longer rungs you already locked in keep paying the old higher rate.
- Mental model of yield. A fully-built ladder produces a predictable annual payout, like a small pension.
The tradeoff is simplicity. A ladder requires opening N separate CDs, tracking them, and making a reinvestment decision each year when one matures. Some brokerages (Fidelity, Schwab, Vanguard) let you build and manage a ladder in one dashboard — worth the hassle if you have $25,000+ to ladder.
Formula
Each rung compounds at the supplied APY for its term length:
amount_per_rung = total_invested ÷ number_of_rungs
for rung k in 1..N:
maturity_value_k = amount_per_rung × (1 + APY)^k
interest_k = maturity_value_k − amount_per_rung
total_interest = sum(interest_k)
total_final = total_invested + total_interest
Two assumptions worth calling out:
- Single APY across all rungs. In reality, a 1-year CD usually pays a different APY than a 5-year CD. This calculator uses one average APY for simplicity — fine when the yield curve is flat, less accurate when short and long rates diverge sharply. If you want precision, run the calculator once per rung with its actual quoted APY.
- Compounding is baked into APY. Banks quote APY (Annual Percentage Yield) as the effective rate after compounding within the year. You don't need to adjust for monthly or quarterly compounding separately.
Scenarios at a glance
$100,000 total with a flat 4% APY across all rungs:
| Rungs | Amount per rung | Total interest at full maturity | Steady-state annual rollover + interest |
|---|---|---|---|
| 3 rungs (1/2/3-yr) | $33,333 | ~$8,230 | $33,333 principal rollover + ~$1,333 interest |
| 5 rungs (1–5 yr) | $20,000 | ~$21,660 | $20,000 principal rollover + ~$4,330 interest |
| 10 rungs (1–10 yr) | $10,000 | ~$48,020 | $10,000 principal rollover + ~$4,800 interest |
Longer ladders earn more total interest and produce smoother annual cash flow, but lock up more of your capital long-term — pick the rung count that matches how much liquidity you actually need each year.
Worked example
Dana has $50,000 in a high-yield savings account earning 4.25% APY. She wants some of that money to keep earning above-average interest even if savings rates drop, but doesn't want to lock it all up for 5 years. She builds a 5-rung ladder at a current average APY of 4.5%.
Running the calculator:
- Per rung: $10,000 in each of five CDs (1yr, 2yr, 3yr, 4yr, 5yr)
- Total interest at full maturity: ≈ $7,169
- Total at full maturity: ≈ $57,169
- Annual maturity once self-rolling: ≈ $12,462 per year
During the first year, only rung 1 matures, paying $10,450. Dana can spend it or roll it into a new 5-year rung at whatever the going rate is. By year 5, her ladder is fully self-rolling — she gets about $12,462 of maturing principal + interest each year indefinitely, and she always has cash available within 12 months.
FAQ
Is a CD ladder better than a high-yield savings account?
Depends on your time horizon. Savings accounts are fully liquid but the rate floats — it can drop the day after you deposit. CDs lock in the rate for the term, trading liquidity for predictability. In a rising rate environment, savings wins; in a falling rate environment, long-term CDs win. A ladder hedges both ways.
What if I need to break a CD early?
You pay an early-withdrawal penalty — typically 3–6 months of interest for shorter CDs, 6–12 months for longer ones. Read the disclosure before buying. If you think you might need the money, put that portion in a shorter rung or leave it in savings.
Should I build a ladder with Treasury bills or CDs?
Similar idea, different risks. Treasury bills are backed by the US government (considered risk-free). CDs are FDIC-insured up to $250k per bank per depositor — also effectively risk-free for most savers. Treasuries are often quoted as a higher yield but pay taxable federal interest; CDs are fully taxable. T-bills usually win on yield; CDs win on simplicity.
Is CD ladder interest taxable?
Yes — interest earned on a CD is taxed as ordinary income in the year it accrues, not when the CD matures. Your bank sends a Form 1099-INT at year-end. Hold CDs in an IRA or Roth to defer or avoid this tax.
What happens if rates fall sharply after I build the ladder?
You win. The long-term rungs keep paying the old higher APY until they mature. Your shorter rungs renew at the new (lower) rates, but the ladder as a whole earns a blended rate above what a new buyer would get.
Can I add money to an existing ladder mid-term?
Not to an existing CD. When a rung matures, you can open a new one with more money than before. Between maturity events, extra savings typically go into a holding account or a new rung at a different term.
Last updated: April 23, 2026