CD Laddering
Let Nationwide Bank help educate you on a CD laddering strategy that may be right for you
As your Nationwide Bank CD matures and you have additional funds to expand your savings options, consider a CD ladder as a viable strategy to diversify and grow your portfolio.
CD laddering is an attractive strategy for those looking for a secure, higher-interest savings option that a CD offers, with the added convenience of having more frequent access to your money over time.
We’ll explain what CD laddering is, give you an example of a possible CD laddering strategy and help you determine if laddering CDs is the right strategy for you.
What is CD laddering?
CD laddering is a strategy often used to manage multiple CD accounts. Individuals enjoy attractive interest rates that are typical to traditional CDs while maximizing the potential of their earnings, by opening several CDs at one time, all with different intervals of maturity. By doing so, funds mature at varying times, freeing up portions of your money intermittently, thus allowing you to continue saving or withdraw the funds1.
An example of a CD laddering strategy
Say you have $8,000 to deposit. Instead of opening one fixed-term CD and depositing the entire $8,000, leaving you virtually no access to your money until the CD matures, you may want to consider this CD laddering strategy:
- Put $2,000 in a 6-month CD
- Put $2,000 in a 12-month CD
- Put $2,000 in an 18-month CD
- Put $2,000 in a 24-month CD
Then, after the initial six months has elapsed, your first CD will have reached its date of maturity and can be withdrawn. However, with this CD laddering strategy, you may want to take that $2,000 and its accrued interest and redeposit it in a new 24-month term. This will ensure that you have access to your next maturing 12-month CD of $2,000 in another six months, while continuing the laddering effect by redepositing in another laddering CD that will mature 6 months after your original 24-month term.
This type of CD laddering strategy creates a staggered savings approach, where you have regular intervals of access to your money, while yielding higher returns, as you continue to save more for the future.
Is a CD laddering strategy the right choice for you?
A CD laddering strategy can be a good choice if you want to take advantage of the higher yield CD interest rates, while still enjoying regular access to your money at fixed intervals.
A CD ladder is a great choice if you are looking to earn valuable interest at a greater rate of return than traditional savings and money market accounts. However, if you decide that you may need more access to your funds, compare CDs to other Nationwide Bank savings alternatives with this helpful chart.
When you are ready to get started, open a Nationwide Bank CD account and start earning today!
1 Penalty for early withdrawal may apply.
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