How To Use A CD Ladder Calculator (Ultimate Guide)

CD ladders, or mainly well known as Certificates of deposit were introduced to people for a long time and allow users to benefit themselves from higher interest rates by associating them with long-term investments.  

Many professional investors are not in favor of these Certificates of deposit, as other multiple saving options benefit them with a much handsome amount of money than what this certificate offers. 

But if you’re looking forward to investing your money in a thing that proves to be produced and helps you in the long run by generating a handsome amount of profit for you, then these certificates of deposit can be your one-stop solution. 

Besides offering a higher rate of interest in long-term investments, these CD ladders offer you with ultimate liquidity and security of your investments, while enabling you to get the most bang for your buck. 

The article below provides you with an ultimate guide about what CD ladders are and how you can use a CD ladder calculator to calculate your interests. 


First Things First: What are CD Ladders?

What are CD Ladders

If we speak in financial terms, a CD is a certificate of deposit that’s considered to be a saving product and comes in handy with a fixed maturity date and fixed interest rate. 

The one main disadvantage of CDs is that, if you want to get higher interest rates from your investments, then typically, you’ll need to lock all of your investments for a prolonged period.

In short, a CD that’s locked for one year will generate a much lower interest rate than a CD that’s locked for approximately five years. 

And here’s the part when the ladder comes to provide people with ultimate benefits. 

Ladder tends to be an investment strategy that comes in handy to stagger the maturity dates of these CDs.

By using multiple CDs, ladder provides users to access higher interest rates as promised by the certificates, without tying up the investor’s money in a single fixed long term investment. 

In a much simpler version, with a CD ladder, an investor will be able to generate a higher interest rate even on his short-term investments, without losing access to all of his money. 

This is so because the CDs mature at different intervals, hence enabling you to regain access to your part of the money regularly,  as the individual rungs mature. 

Let’s look towards a comprehensive example to see how a CD ladder works? 

Let’s suppose that you have around 5000 dollars to invest. Now you have two options to invest your money.

The first one is that you either invest your money in a fixed account, which is commonly known as a savings account at a low-interest rate.

On your 5000 dollars, you’ll be yielding 1.25 percent of interest annually.  

On the second hand, you can invest your 5000 dollars in a CD ladder, but instead of investing all of your money at once, you split your money into five different interest rates and maturity dates. 

If you go with option one, you will be able to receive an amount of 5062.50 dollars.

While in case if an emergency occurs and you want your 5000 dollars back while opting for option one, you won’t be able to get your money back until and unless the maturity period ends.

On the other hand, if you go with option two, by investing your money in a CD ladder, you’ll be able to receive an amount of 5101.50 dollars after two years.

While in case an emergency occurs, you’ll have the opportunity to withdraw your actual amount with the interest it 

Considering both of the options above, it’s pretty obvious that option two comes in handy with a ton of advantages, while benefiting you to get a higher interest rate over your investments within a short period.  

Though many people choose CDs for a long-term investment, CDs do provide users with a short term investment of about only 2 to 3 months

Having said that, according to the rules and regulations of the CDs, a penalty will be implemented on you to withdraw your investment before its maturity date.

Hence, it’s not advised to ask for your money back within a short span, but if it’s really necessary for you, then the option is valid

Getting the Most Bang for your buck Investing when Interest rates are High: 

When Interest rates are High

There is no such thing that you can’t invest your money in different or multiple amounts of products, some of the misconceptions are prevailing in the market, and due to that, many younger folks don’t go for this option. 

It’s said that if the interest rate of the product you’re looking forward to investing in is providing you with a higher percentage of interest than usual, then it’s preferred to go for locking more of your substantial sums into the longer-term investments. 

The cycle of investment is as simple as you buy something for cheaper rates and sell it at a much higher rate to grab more profit.

The same goes for investments, the larger the amount you invest in more extended terms, the higher and more interest you’ll be able to get your hands on. 

CD ladders offer many of the advantages that CDs do, but without some of the drawbacks.

If you go through the operation of investment, you will need to choose between two options, either you’ll be going for a reasonable interest rate, or you will be opting for a safe investment.

This is because higher investments don’t promise you higher returns, but a possibility of a higher amount of interest to be generated. Whereas in a safe investment, you’ll be getting a guaranteed return on investment. 

A CD ladder promises you to provide productive results for both of the worlds, as featuring a higher interest rate if compared to other investment products, but what makes a CD ladder stand out specifically is that they’re safe to be used. 

All of these certificates are insured by the government, which proves that there are zero chances of anything hindering your finances.  

Moreover, being enriched with productive policies and functionality,  these CD ladders are a more advanced version of the traditional CD and enable users to overcome the drawbacks of it. 

While going with a regular CD, your money will be locked at a fixed interest rate, moreover, you won’t be having any access to your investment as long as they are in their maturity period.

This means that if the interest rate of the product, you won’t be able to demand this new rate, because your investment won’t be considered eligible for it. 

However, while opting for the CD ladder, you will be able to take advantage of the new higher value of interest rate as CD ladders come in handy with different maturity levels, which allows users to lock their new ladder rung with the latest high-interest rate. 

Concluding with the statement of Goldman Sachs, he explains that it doesn’t matter that you begin your career on the CD ladder with few short term investments, you’ll end up gaining higher interests.

Moreover, you’ll switch your short term investments to long term by the end of five years for sure. 

Moreover, you’ll still be having your investments maturing yearly, so you can remain assured that your cash flow won’t be affected at any cost. 

The ability to plan is a major advantage of CD ladders, which is hugely beneficial to young investors 

As CD ladders come in handy with fixed terms and interest rates, it makes it easier for the users to plan for their future. 

It doesn’t matter how much the rates of the interest fluctuate in your maturity period, it will still keep you updated and aware of how much interest you’ll be able to receive once your maturity period gets over. 

Hence this makes CD ladders an excellent investment option for the youth and younger investors to plan their future significantly. 

Let’s suppose you currently have 50000 dollars in your hand right now that you’ve saved so that you can use them in the upcoming five years as a down payment of your house. 

While investing this amount in a CD ladder, with the help of a CD ladder calculator, you’ll be able to calculate the exact amount of interest you can have after 5 years of maturity period.

You Can Even Plan Maturity Dates to Correspond with your Financial Needs:

CD ladder provides users with a wide range of options to provide users with a profound experience.

In the CD ladder, you’ll be able to customize and adjust your investments as per your convenience, and as per your financial needs. 

For example that you have an ample amount of money saved so that you can pay your school fees.

But school doesn’t require you to pay the tuition fees all in one lump sum, you can invest this save amount in a CD ladder, and while going through the planning and operation of your investments, you can adjust the maturity dates according to when your tuition payments get due.

The advantage of this will be that you’ll have your tuition fee back, and a couple of extra dollars an interest that can be used later on.  

Similarly, if you have planned everything for your future, and you’re well aware of the milestones you need to achieve, then the maturity dates of the CD ladder can be adjusted accordingly, so that can achieve your goal with ease.  

Who doesn’t like some extra cash for free? Hence this investment proofs to be fruitful as you’ll be receiving your cashback, along with the interest amount is generated. 

CD Ladder Calculator:

CD ladder calculator is a tool that allows users to calculate the amount of interest they would be able to generate within a certain period.

Being easy to operate, by simply inputting the invested and deposit amount, the user will be able to get a perfect estimate of the figure he’ll be receiving at the end of the maturity period. 

Drawbacks of Using CD Ladders to Save for Big Purchases:

Besides benefitting people with its splendid services, the CD ladder consists of few downsides as well.  The very first thing that we would like to mention is that CD ladders have failed to provide users with stellar interest rates for the past few years. 

The other complication with the CD ladder is that if you lock your investments into the CD ladder, there are certain chances that you might miss out on avail the higher new interest rates.


Certificates of deposit prove to be a safe and reliable investment option for young investors that are looking forward to earning some extra cash, but unfortunately, they do carry some drawbacks.

On the other hand, the CD ladder comes with advanced policies that involve investing in multiple CDs according to your personalized maturity dates.  

While benefiting users with higher interest rates just like the one they receive in long-term investment plans, the CD ladders provide users to access their money even while in their maturity period. 

Having said that, CD ladders proves to be a profound platform for young investors to save a  handsome amount of money for their future.