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CD Laddering: A Smart Strategy for Rising Rates

If you’re looking for a Certificate of Deposit (CD) investment strategy in the interest rate environment, you may have heard of CD laddering. CD laddering is a strategy that involves investing in multiple CDs with different maturity dates. It’s a simple but effective way to take advantage of an interest rate environment that’s always changing, no one wants to guess wrong on their deposit rates.

CD laddering is not as popular as it used to be because of the low-rate environment we’ve been in for many years, and there’s so many options available for savers. Many savers have forgotten about this strategy or think it’s too complicated or time-consuming. CD laddering is a time-tested way to continually invest your deposit money in FDIC insured CDs so you’re not timing interest rate changes. It’s time to become reacquainted with CD laddering, which can offer many benefits, especially in today’s market.

That’s why we want to remind you of the advantages of CD laddering and how Lake Ridge Bank can help you get started. Here what you need to know:

What Is CD Laddering?

CD laddering is a strategy that involves dividing your money into equal portions and investing each portion in a CD with a different maturity date. For example, you could invest $10,000 in five CDs with maturity dates of one year, two years, three years, four years, and five years. This way, you create a “ladder” of CDs that mature at regular intervals. CD laddering helps consumers manage their rates through ever changing interest rate changes. You do not need to bet on only one rate and term overtime.

Why Does CD Laddering Work?

CD laddering works because it allows you to lock in higher rates for longer periods of time, while still having access to some of your money every year. When one of your CDs matures, you can either use the money for your needs or reinvest it in another CD with the longest maturity date available, or find a CD term that diversifies your time frames. This way, you can take advantage of rising, or changing rates, and typically increase your income over time. CD laddering also helps you avoid the risk of chasing hot rates or locking in low rates for too long. By spreading your money across different maturity dates, you can balance the trade-off between liquidity and rate. You can enjoy the flexibility of having some money available every year, while still earning higher interest rates on the rest of your money.

How Can You Start CD Laddering?

CD laddering is easy to start and maintain with Lake Ridge Bank. We offer a variety of CDs with competitive rates and low minimum opening requirements. You can choose from shorter term specials to much longer-term CDs. Your goal is to not make one bet, but to have a consistent, diversified approach that can stand the test of time and rates changing in either direction.

Our experienced Personal Bankers are here to help you review our rates and create a CD ladder that suits your needs and goals. We can help you decide how much money to invest, how many CDs to open, and how long to make each term.

If you’re interested in CD laddering or want to learn more about our deposit products, contact one of our knowledgeable bankers today at (608) 223-3000 or visit any of our convenient locations.