Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
Today, many investors are looking for safety. Certificates of deposit provide a guaranteed return of principal, plus a little extra gain. However, today’s CD rates have fallen dramatically since the Federal Reserve began slashing interest rates in the wake of the financial crisis.
How can investors get a better return on their savings? Many experts recommend laddering. This approach allows you to search for today’s best CD rates, while also saving a little cash so you can take advantage of higher rates in the future.
How does laddering work?
The length of the ladder is determined by you, the investor. It can be as short or as long as you choose. Here is an example of how a five-rung, five-year ladder can enable you to take advantage of the best CD rates available.
Let’s say that you have $25,000 to invest. You would begin by purchasing one $5,000 one-year CD (the first rung of your ladder). Then you would purchase one $5,000 two-year CD, and continue the process until you use your remaining $5,000 to purchase a five-year CD (the fifth and final rung). When your one-year CD comes due, or matures, you can reinvest that money into a new five-year CD since your first five-year CD now has only four years remaining.
What are the other benefits of laddering?
Rolling your money into a new five-year CD as each year’s CD matures can allow you to take advantage of the best CD rates available. In addition, it can eliminate much of the emotional decision-making that accompanies investing. It can also provide a steadier stream of income by reducing the wide swings — both high and low — that are part of interest rate cycles.
By automatically replacing your longest maturity, you will always be in a position to get the highest rates. Also, by using the ladder system, you will only be reinvesting some of your finances when returns are low. To find out more about CD laddering, see the Bankrate feature, “Laddering: How to build a CD ladder.”
Share