How Laddering of Certificates of Deposit (CDs) works

Certificates of Deposit (CDs) offer a stable investment during times of market turmoil and economic uncertainty. Laddering CDs (which involves investing in several CDs with different terms) is a smart approach for investors who want to increase return on investment without sacrificing liquidity.

With laddering, longer-term CDs provide higher yields. That's particularly important to individuals, such as retirees, who rely on a fixed income.

How Laddering Works

While longer-term CDs earn higher rates, it's not unusual to unexpectedly need access to cash before a long-term CD matures- and early withdrawal usually results in a penalty that can offset the higher rate. Using a CD ladder helps a consumer earn higher yields and make funds more liquid at the same time.

Consider an investor who has $60,000 available for CD investments. The investor opens three separate CD accounts of $20,000 each, with terms of one, two and three years, thus creating three rungs on a CD ladder.

When the first CD matures, the other two accounts move up a rung on the ladder. The investor can use the funds from the mature CD to purchase a new three-year CD-or use the cash to meet other requirements.

For additional information on CD laddering, call Countrywide Bank at 1-877-CWBANK-5 or visit

For many people, CDs are a secure investment.

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