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Step Up Your Savings with "CD Laddering"

Certificates of Deposit (CDs) are a great way to make the most of your savings, but they do require that you tie up your money for months or years. How can you take advantage of guaranteed CD rates, and still have some access to your money? Consider implementing a savings technique called “CD laddering.” Here’s how it works:

Let’s say you have $30,000 to deposit. Instead of opening a single CD, split your deposit into multiple, smaller CDs with terms that ascend, just like the rungs on a ladder. For example, perhaps you’d open a 6-month, 12-month and 18- month CD of $10,000 each. If you don’t need to use the money when your 6-month CD matures, keep the “ladder” approach intact by taking that money and rolling it into a new 18-month CD. When your 12-month CD matures, roll that into a new 18-month CD. The result is a series of three 18-month CDs, with one CD maturing every six months.

The table below shows how the additional interest generated by this approach adds up, using hypothetical interest rates. The left-hand column assumes $30,000 in a 6-month CD that’s rolled over; the right-hand column shows the same $30,000 “laddered.”

 6-month CD
with Rollover  

  18-month CD

Initial Deposit



Interest Rate(s)
    6-month CD



  12-month CD


  18-month CD


Interest Earned
After 18 Months





No one really knows where interest rates will be in the future, but this way, you can take advantage of the higher rates generally offered with longer-term CDs, while still being able to access some of your money sooner if you need to.

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