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A CD ladder is a way to get CD rates without handing over all your cash for years. Instead of one big certificate of deposit, you buy several that come due on staggered dates. Take $20,000, for instance. Marcus by Goldman Sachs was paying 4.40% APY on a 12-month CD on November 2, 2026, and Synchrony was paying 4.30%. The FDIC’s national average for that term? Just 1.76%. That’s a big gap, which is why a CD ladder is worth a look. Below, we walk through building one, what each rung earns, and when you’re better off skipping the idea.
How a CD ladder works
Here’s the mechanic. You divide your money into equal chunks and buy a CD with each, using a different term for every chunk: six months, a year, 18 months and two years, say. When the shortest one matures, you decide. Pocket the cash, or reinvest it in a new two-year CD. Keep doing that and eventually all of your CDs are two-year ones, yet one still matures every six months.
Why bother? You get a regular shot at your money without paying an early-withdrawal penalty, and you aren’t betting everything on today’s rate. If rates go up, new money picks up the higher rate soon enough. If they fall, your longer CDs hold the old one.
What CDs pay right now
Online banks usually pay the most. We checked two big ones on November 2, 2026, and set their posted rates beside the FDIC’s national averages, which were last updated October 19.
| Term | Marcus | Synchrony | FDIC national average |
|---|---|---|---|
| 6 months | 3.95% | Not listed | 1.39% |
| 9 months | 4.30% | 4.50% | Not published |
| 12 months | 4.40% | 4.30% | 1.76% |
| 18 months | 4.40% | 4.50% | Not published |
| 24 months | 4.40% | 4.60% | 1.55% |
| 60 months | Not shown | 4.75% | 1.41% |
Look at the Marcus column. It pays 4.40% on every term from 12 to 24 months, so there’s no reward for tying money up longer. Meanwhile the top online rates run roughly two and a half times the national average. Marcus wants $500 to open a CD; Synchrony lists no minimum. Rates move, so check the bank’s page on the day you buy.
Build a CD ladder in four steps
First, decide how much money you can truly lock up. Your emergency fund shouldn’t sit in CDs. Keep it in savings (our guide to building an emergency fund explains how much). Whatever’s left is ladder money.
Then pick four rungs and split the cash evenly. Buy a 6-month, a 12-month, an 18-month and a 24-month CD. When one matures, roll it into a new 24-month CD, or take the cash if you need it. That’s the whole system.
A CD ladder example with $20,000
We ran the numbers on four $5,000 rungs using the Marcus rates above. Each figure compounds the APY over the term, so treat them as estimates, not bank quotes.
| Rung | Rate | Interest at maturity on $5,000 | Cash available |
|---|---|---|---|
| 6-month CD | 3.95% | $97.79 | Month 6 |
| 12-month CD | 4.40% | $220.00 | Month 12 |
| 18-month CD | 4.40% | $333.60 | Month 18 |
| 24-month CD | 4.40% | $449.68 | Month 24 |
Total interest after 24 months: $1,101.08. You also get $5,000 back every six months. Put the entire $20,000 into a single 24-month CD at 4.40% and you’d earn $1,798.72, but you couldn’t touch a dime until month 24. That gap, about $698, is the price of having cash come due along the way.
Rolling matters too. At month 6, the first $5,000 plus its $97.79 goes into a new 24-month CD at whatever rate is posted then. By month 24, you’d own four CDs that mature six months apart.
Shopping around matters as much as the structure. A 12-month CD at the FDIC’s national average of 1.76% would pay about $88 a year on $5,000, against $220 at Marcus. That’s roughly $132 per rung, every year, before you even consider the timing of a CD ladder.
What an early withdrawal costs
Break a CD ladder rung early and you’ll pay. Synchrony takes 90 days of simple interest on terms of 12 months or less, and 180 days on terms longer than 12 months but under 48. On a $5,000, 24-month CD at 4.60%, that’s about $113.42. On a $5,000, 12-month CD at 4.30%, it’s roughly $53.01. Marcus says only that penalties that may reduce earnings apply to a withdrawal of principal before maturity.
Taxes are a separate matter. The IRS says in Publication 550 that you report the total interest paid or credited, without subtracting the penalty.
When a CD ladder beats one big CD, and when it doesn’t
A CD ladder earns its keep when you want more than a savings account pays but can’t promise you won’t need some of the cash. It’s also a hedge on rates. The Federal Reserve held its target range at 3.75% to 4.00% on October 28, in a 10-2 vote; the two dissenters wanted an increase. The next meeting is December 8-9. If rates climb, you can reinvest a slice at the higher level. If they fall, the long rungs keep the old rate.
Skip the ladder in two cases. If you’re sure you won’t touch the money for two years, one 24-month CD earns more, as the example showed. And if you might need all of it on short notice, a high-yield savings account is the safer home. The gap isn’t huge: on $20,000 for a year, Marcus’s 12-month CD at 4.40% earns $880 and Synchrony’s savings account at 3.75% earns $750, a difference of $130. That’s real money, but you’re being paid for the penalty risk. For current savings rates, see our best high-yield savings accounts guide, and for CD-by-CD comparisons, our best CD rates guide.
Keep the CD ladder inside insurance limits
CDs at FDIC-insured banks are covered up to $250,000 per depositor, per bank, per ownership category, according to the FDIC. Interest counts toward that cap, so a big ladder parked at one bank can creep over it. Our guide to the FDIC insurance limit explains the categories; spreading rungs across banks is the easy fix.
Editor’s Take
A CD ladder suits people who want a bit more yield and a bit more control, and it works best when it’s boring. Four rungs, a bank with a published penalty, and the maturity dates on a calendar. Don’t mistake the headline rate for the whole story, either. With the curve this flat, a short ladder costs you very little yield compared with locking everything up for two years, and the flexibility is worth more than the few basis points you’d gain.
This is general information, not financial advice. Rates change often, so check the APY, minimum and penalty on the bank’s own page before you buy.
