For many people, a certificate of deposit (CD) is a great savings option to get a guaranteed, fixed interest rate within a set amount of time that’s much higher than a typical savings account. But if you’re someone who’s worried about possibly losing access to your savings in case an emergency may come up, the idea of putting a large amount into a long-term CD might seem risky. For anyone who is looking for the best way to balance getting the guaranteed returns of a CD and still maintain financial flexibility to access your funds if needed, then a CD Ladder strategy can be a great tool to build savings. 

What is a CD ladder? 

A CD ladder is a savings strategy where multiple CDs are opened with different maturity dates staggered in an equal timeframe (typically every six months or every year) all at once. As a result, once the CDs are established, you will have a CD maturing every six months or every year, giving you more regular access to funds without sacrificing the high rates that longer-term CDs offer. 

For example, if you have $5,000 dollars to invest, instead of putting it all together in a single five-year CD, you’ll split it into five $1,000 CDs: 

• CD 1: Six-month term 
• CD 2: One-year term 
• CD 3: Two-year term 
• CD 4: Three-year term 
• CD 5: Five-year term 

Once CD 1 matures, you will then reinvest the $1,000 (plus interest it accrued) into a new 5-year (or whatever timeframe gives the best return rate) CD. When CD 2 matures at the end of year one, you do the same. Every time a CD matures, you’ll have a chunk of your initial deposit to spend if needed or otherwise reinvest into a new CD with the best rate. If you keep staggering the maturity dates of the CDs, you will have access to a portion of your money at the end of each term. 

By spreading your money across cascading CD terms, you’ll have constant access to at least a portion of your cash. Also, by increasing your liquidity and knowing when you’ll be able to enjoy that liquidity, you are less likely to end a CD term early and thereby pay an expensive fee. If you end up not needing the money, you can still take advantage of earning longer-term CD rates knowing you’ll have a CD maturing and more funds available within the timeframe you originally set if cash is needed then. 

What are the Pros and Cons of a CD Ladder? 

Pros include: 

• Rate Protection from Both Rising and Falling Rates: If rates rise, you’ll have the opportunity to “catch the wave” with your maturing CDs. If rates fall, you have peace of mind knowing your existing long-term CDs remain locked into yesterday’s better rates. 

• Liquidity on Your Terms: Depending on your ladder structure, you’ll have access to some of your funds without early withdrawal penalties. 

• Predictable Returns: Unlike investing in stocks, you’ll know exactly what you’ll earn and avoid volatility. 

• Zero Risk to Principal: Insurance (FDIC for banks and NCUA for credit unions) will cover up to $250,000 per depositor, per account type, per institution. 

Possible cons include: 

• Opportunity Cost: Trading stocks holds more potential risk but also can yield higher potential gains.  In the same way, choosing a shorter (or longer) term in order to make sure you stagger the CD maturity dates could leave some money on the table, because you’re not always choosing the CD with the best rate. 

• Limited Access: With CD laddering, you’ll gain annual access to a portion of your money each year, but the majority of it will still be inaccessible without penalties. 

• Effort Involved: CD Laddering requires keeping track of your CDs to have an effective strategy. It’s important to keep in mind that if you don’t close your CD during the grace period, your bank or credit union may automatically renew your CD for the same term. While this isn’t a major issue, it does diminish the intended purpose of the ladder. 

 

Build a CD Ladder with Bellco 

Building a CD ladder is a straightforward process, though there are a few basics to consider. 

Start by deciding how much money you wish to dedicate toward your effort. Once you’ve got that sorted, determine how frequently you want your CDs to mature. This should depend on how long you can make do without your cash and the current state of interest rates. You don’t have to put the same amount into each term, but it’s generally a good idea to spread your cash evenly across accounts. It’s easier to manage, involves fewer decisions when a CD matures, and you’ll get the benefit of hedging against interest rate risks. 

In the end, choosing a CD ladder strategy is all about maximizing certainty in your returns while still maintaining some flexibility in your finances. If you’re interested in learning more, you can speak with a Bellco Credit Union representative at your nearest convenient branch today. Additionally, Bellco is currently offering a special rate of 4.00%* APY on a 6-Month CD that you can factor into your ladder. You can open a Bellco CD with as little as $500 so it’s a great option whether you’re on the start of your savings journey or looking for a great short-term return for a large chunk of your savings. 

Bellco is federally insured by the NCUA.  Membership eligibility required. 

*The annual percentage yield (APY) is accurate as of August 1, 2026 and is subject to change without notice at any time prior to the issuance of the certificate. After the point of issuance, APY is fixed for the full term of the CD. Early withdrawal penalties may apply. Fees or withdrawal may reduce earnings on the account.