If you’re looking for a Certificate of Deposit (CD) strategy in today’s interest rate environment, you may have heard of CD laddering. CD laddering is a strategy that involves depositing funds into multiple CDs with different maturity dates. It’s a simple but effective way to take advantage of an interest rate environment that’s always changing, because no one wants to guess wrong on deposit rates.
CD laddering is not as popular as it used to be because of the low-rate environment we’ve been in for many years, and there are so many options available for savers. Many savers have forgotten about this strategy or think it’s too complicated or time-consuming. But as a CD investment strategy, CD laddering is a time-tested way to continually capitalize on your deposit money in FDIC-insured CDs so you’re not trying to time interest rate changes. It’s time to become reacquainted with CD laddering, which can offer many benefits, especially in today’s market.
That’s why we want to remind you of the advantages of CD laddering and how Lake Ridge Bank can help you get started. Here’s what you need to know:
What Is CD Laddering?
CD laddering is a strategy that involves dividing your money into equal portions and depositing each portion in a CD with a different maturity date. For example, you could deposit $10,000 in five CDs with maturity dates of one year, two years, three years, four years, and five years. This way, you create a “ladder” of CDs that mature at regular intervals. This laddering strategy helps consumers manage their rates through ever-changing interest rate environments. You do not need to bet on only one rate and term over time.
Why Does CD Laddering Work?
CD laddering works because it allows you to lock in higher rates for longer periods of time, while still having access to some of your money every year. When one of your CDs matures, you can either use the money for your needs or redeposit it in another CD with the longest maturity date available or find a CD term that diversifies your time frames.
This way, you can take advantage of rising or changing rates and typically increase your income over time. A CD laddering strategy also helps you avoid the risk of chasing hot rates or locking in low rates for too long. By spreading your money across different maturity dates, you can balance the trade-off between liquidity and rate. You can enjoy the flexibility of having some money available every year, while still earning higher interest rates on the rest of your money.
Is a CD Laddering Strategy Right for Savers Who Want Flexibility?
One reason savers may hesitate to open a CD is the concern that their money will be tied up for too long. Even when customers want to earn more interest than they might in a traditional checking or savings account, many still value access to their funds above all else, in case of emergency.
That is where a CD laddering strategy can help. Instead of placing all of your money into one CD with one maturity date, CD laddering allows you to divide your funds across multiple term lengths. For example, you might place part of your money in a shorter-term CD and another portion in a longer-term CD. This creates regular maturity dates, giving you opportunities to access funds, roll money into a new CD, or adjust your plan based on current rates and your financial needs.
This approach can make CDs feel less restrictive while still helping savers pursue stronger interest-earning opportunities. For customers who want a balance between growth and flexibility, a laddering strategy can be a practical way to put available cash to work without giving up every point of access at once.
How Can You Start a CD Laddering Strategy?
CD laddering is easy to start and maintain with Lake Ridge Bank. We offer a variety of CDs with competitive rates and low minimum opening requirements. You can choose from shorter-term specials to much longer-term CDs. Your goal is not to make one bet, but to have a consistent, diversified approach that can stand the test of time and fluctuating rates.
Our experienced Personal Bankers are here to help you review our rates and create a CD ladder that suits your needs and goals. We can help you decide how much money to invest, how many CDs to open, and how long to make each term.
Why Work With a Banker on Your CD Laddering Strategy?
Online tools can help you compare CD rates, but they cannot always tell you which CD investment strategy makes the most sense for your goals. At Lake Ridge Bank, helping clients choose a CD laddering strategy starts with a conversation about what you want the money to do. Are you saving for a future home purchase, school, or another large expense? Or are you simply looking for a better return on cash you do not need right away?
From there, a banker can help you think through how quickly you may need access to the money, how comfortable you are with different term lengths, and whether a CD laddering strategy may fit your needs. For example, you may decide to place part of your funds in a shorter-term CD, another portion in a one-year CD, and another portion in a longer-term CD. As each CD matures, you can decide what to do with the funds.
If you’re interested in CD laddering or want to learn more about our deposit products, contact one of our knowledgeable bankers today at (608) 223-3000 or visit any of our convenient locations.
