Not long ago, a customer stopped by one of our branches with a simple goal. She wanted to earn a predictable return while still knowing some of her money would become available on a regular basis.
The strategy discussed wasn’t complicated. It was a CD ladder, and it’s one of the most practical ways to save in uncertain markets. A CD ladder isn’t about trying to predict where interest rates are headed. It’s about creating a savings strategy that can adapt no matter what happens next.
If you’ve ever wondered whether you should choose a short-term CD or lock in a longer term, a CD ladder offers a way to do both.
Key Takeaways
- A CD ladder spreads your savings across CDs with different maturity dates.
- It can provide regular opportunities to access or reinvest part of your savings.
- CD laddering can reduce the pressure of trying to predict future interest rates.
- You don’t have to choose between only short-term or only longer-term CDs.
- OMB Bank offers multiple CD terms that can be combined into a ladder.
Why Savers Use CD Ladders
One of the biggest challenges with certificates of deposit is choosing the “right” term. A short-term CD offers flexibility, while a longer-term CD can reduce renewal decisions and lock in a rate for longer.
A CD ladder lets you combine both approaches instead of choosing just one. Rather than putting all of your savings into a single maturity date, you create a schedule that gives you regular opportunities to reassess your options.
What is CD Laddering?
A CD ladder is a savings strategy that spreads your money across multiple certificates of deposit with different maturity dates. Rather than putting all of your savings into one CD, you divide it among several terms so portions become available at different times. This approach lets you:
- Combine different CD terms in one strategy.
- Access portions of your savings at regular intervals.
- Reinvest funds as CDs mature.
- Balance flexibility with predictable returns.
While the name may sound technical, the strategy itself is surprisingly straightforward.
A Simple Example
Imagine you have $30,000 you’d like to set aside for future goals, but you’re hesitant to commit all of it to a single CD term. Instead of opening one certificate of deposit, you decide to spread the money across three CDs with different maturity dates. Here’s what that could look like using OMB Bank’s current CD terms:
| CD Term | Opening Deposit |
|---|---|
| 3-Month | $10,000 |
| 9-Month | $10,000 |
| 13-Month | $10,000 |
As each CD matures, you can decide what makes the most sense at that time. You might withdraw the money for an upcoming expense, roll it into another CD or reinvest at current rates. Meanwhile, the rest of your ladder continues earning interest. Instead of making one large decision every year or two, you’re making smaller, more manageable decisions as each CD reaches maturity.
Not sure which CD terms belong in your ladder? Our guides to 3-month CDs and locking in today’s rate for longer can help you compare the advantages of shorter- and mid-term certificates before building your strategy.
How a CD Ladder Fits Different Savings Goals
A CD ladder isn’t limited to one type of saver. Here are a few situations where the strategy may make sense.
Saving for a Home Project
Planning a kitchen remodel or major home repair next year? A CD ladder can help your savings continue earning interest while giving you access to portions of the money as project costs arise.
Building a Cash Reserve
If you like keeping a substantial cash reserve or opportunity fund, a CD ladder can provide more predictable returns than leaving everything in one account while still allowing regular access to a portion of your savings.
Retirement Income Planning
Many retirees appreciate having CDs mature throughout the year, creating regular opportunities to access cash or reinvest based on current needs.
Saving for a Future Purchase
Whether you’re planning to buy a vehicle, fund education expenses or make another large purchase, staggering maturity dates can help align your savings with your timeline.
What Are the Benefits of a CD Ladder?
| Benefit | Why It Matters |
|---|---|
| Regular access to savings | A portion of your money matures throughout the year. |
| Predictable earnings | CDs earn a fixed rate when held to maturity. |
| Less pressure to time interest rates | You aren't committing everything at once. |
| Reinvestment opportunities | Each maturity gives you a chance to adjust your strategy |
Is a CD Ladder Right for You?
A CD ladder isn’t the right strategy for every saver, but it can be an excellent fit if your goals align with how it works. You may want to consider a CD ladder if any of the following sound like you:
You don’t want to commit everything to one term.
You value predictable returns.
You’d like periodic access to part of your savings.
You’re comfortable leaving portions of your money on deposit.
A CD Ladder May Not Be Necessary If...
- You’ll need all of your savings in the near future.
- You’re comfortable locking everything into a single CD term.
- You’re investing a relatively small amount and prefer to keep your savings simple.
- You’d rather keep all of your money immediately available in a checking or savings account.
- A single CD term may be a better choice if it already matches your savings timeline and goals.
Frequently Asked Questions
How many CDs do I need?
There isn’t a required number. Some savers build a ladder with three CDs, while others use five or more. The right approach depends on your savings goals, available funds and how often you’d like portions of your money to mature.
Do all CDs have to be the same amount?
No. Many people divide their savings equally because it’s simple, but you can choose different deposit amounts based on your goals and expected cash needs.
Can I use different CD terms in my ladder?
Yes. In fact, that’s the idea behind a CD ladder. Combining shorter- and longer-term CDs creates staggered maturity dates so portions of your savings become available over time.
Can I add another CD later?
Yes. A CD ladder isn’t fixed forever. You can add new CDs, change terms or adjust deposit amounts as your financial goals change.
What happens if interest rates change?
That’s one of the advantages of a CD ladder. Because portions of your savings mature at different times, you’ll regularly have opportunities to reinvest at then-current rates instead of committing everything at once.
Can I build a CD ladder online?
Yes. OMB Bank’s CDs can be opened online nationwide, making it easy to build or expand a ladder without visiting a branch.
Is a CD ladder risky?
CD laddering is generally considered a conservative savings strategy because certificates of deposit provide a fixed return when held to maturity. Eligible deposits at FDIC-insured banks are protected up to applicable limits.
Continue Exploring CDs
A CD ladder is just one way to put certificates of deposit to work. If you’re still deciding which approach makes the most sense for your savings goals, these guides can help:
- Wondering whether a shorter term is the right fit? Learn why many savers choose a 3-Month CD when flexibility is a priority.
- Considering locking in a rate for longer? See when a mid-term CD, like a 13-month CD, may provide the right balance between certainty and flexibility.
- Curious how much a CD could actually earn? Compare estimated interest using $25,000, $75,000 and $249,999 deposits across multiple CD terms.
Get Started
A CD ladder isn’t about finding the perfect interest rate. It’s about creating a savings strategy that gives you confidence today while keeping your options open tomorrow.
Whether you’re building your first CD ladder or comparing individual CD terms, you can explore current OMB Bank CD rates, estimate your earnings with our CD calculator or open CDs online in just a few minutes. If you’d like help creating a ladder that fits your goals, visit any convenient OMB Bank branch and we’ll be happy to walk through your options.
OMB and its affiliates do not provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decision. This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy.
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