finance · 2026-05-01
Build a 5-rung CD ladder, comparing average yield to a single CD or HYSA. Models reinvestment at maturity at current yield curve.
| Total amount to ladder | $50,000 |
| 1-year CD rate % | 4.5% |
| 2-year CD rate % | 4.3% |
| 3-year CD rate % | 4.2% |
| 4-year CD rate % | 4.1% |
| 5-year CD rate % | 4% |
| Compare vs HYSA rate % | 4% |
| Annual interest (ladder) | $2,110 |
| Annual interest (HYSA) | $2,000 |
| Ladder advantage (yr 1) | $110 |
| Amount per rung | $10,000 |
A CD ladder splits your principal across maturities (1, 2, 3, 4, 5 years), so one rung matures every year. Mature money either funds a need or rolls into a new 5-year rung at the prevailing rate.
For ladders, brokered is usually more flexible. For absolute simplicity, bank CDs at a bank you already use.
Each rung that matures rolls into the new (higher) 5-year rate. After 4 more years, your entire ladder is at current rates. The cost of being 'wrong' on a rising-rate environment is amortized across 5 years, not concentrated at one purchase point.
Sometimes, especially for >$50k deposits. Online banks (Marcus, Ally, Synchrony) post advertised rates that are usually higher than brick-and-mortar. Local credit unions sometimes match if asked. Brokered CDs are pure auction — no negotiation, you take the bid.
Diminishing returns past 5. The 5-10 year segment of the yield curve is usually flat, so the marginal yield from extending is small. Liquidity drops further. Stick with 5-rung unless you have a specific 7-10 year horizon for the funds.
Identical — both pay interest taxed as ordinary income at federal + state rates. CDs don't have any tax advantage. The choice is about yield and liquidity, not tax structure.