Propping up a CD Strategy by Laddering

Laddering is an excellent way to ensure you earn the best CD rates possible. Control the terms while getting the liquid availability you want. To ladder, divide your investment among five Certificates with staggered maturities. This creates long-term earning potential paired with liquidity. CDs automatically renew into 5-year Certificates.

How do I ladder my CDs?

Instead of opening one 5-year certificate for $25,000, open five certificates for $5,000 each for the following terms:

  • 12 months
  • 24 months
  • 3 years
  • 4 years
  • 5 years

As each certificate matures, you can either use the funds you need or renew into another 5-year term as in the example below.

  • Original Term: 12 months
  • Original Maturity Date: 7/26/26
  • Renew into: 5-Year
  • Next Maturity Date: 7/26/2031
  • Original Term: 24 months
  • Original Maturity Date: 7/26/27
  • Renew into: 5-Year
  • Next Maturity Date: 7/26/2032
  • Original Term: 3 year
  • Original Maturity Date: 7/26/28
  • Renew into: 5-Year
  • Next Maturity Date: 7/26/2033
  • Original Term: 4 year
  • Original Maturity Date: 7/26/29
  • Renew into: 5-Year
  • Next Maturity Date: 7/26/2034
  • Original Term: 5 year
  • Original Maturity Date: 7/26/30
  • Renew into: 5-Year
  • Next Maturity Date: 7/26/2035

Why should I ladder my Certificates?

With laddering, you will always have 20% of your Certificate savings available each year. When you renew each maturing Certificate into a 5-year term, you will be earning a higher rate than if you had simply continued, for example, with another 12- or 24-month certificate. The strategy works to your advantage because after a few of your certificates mature and are renewed into another 5-year certificate, you will be earning the highest rate and have a 5-year certificate maturing every year.

The same idea can be applied to shorter and longer-term examples. It’s really up to you how you want to save and use your funds. Laddering can provide you with a steadier and more stable source of savings than a single-certificate investment. The best part is you can always add funds to your certificate at maturity and watch your savings grow! Call our Member Service Representatives at 855-663-8328 to put your Certificate investments to work!

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