This Is How Much Money You Can Make With $15,000 in a CD Ladder
KEY POINTS
- CD ladders give you access to funds at different maturity dates, overcoming one of CDs' main drawbacks.
- A $15,000 CD ladder made up of three $5,000 CDs would net $1,031.38 in three years.
- Longer-term CD rates are lower than those of shorter-term CDs at the moment, so consider shorter-term CDs to earn the highest return.
If you're looking for a safe investment, certificates of deposit (CDs) are a solid choice. You don't have to stress about market fluctuations because CD returns are guaranteed (and FDIC insured). Unlike a checking or savings account, you can't spend the money because you're locked in for a specific amount of time (the CD's term)
A CD ladder helps overcome one of the main disadvantages of CDs -- that is, you don't have access to your funds without paying a penalty. Instead, you purchase multiple CDs with different maturation dates, creating a "ladder" of funds you can access over time.
For example, with $15,000, you might buy three $5,000 CDs that mature at one year, two years, and three years. Let's look at how much that could earn you.
Ready to create a CD ladder? Check out the website for LendingClub CDs to see current rates from one of our top CD providers and open one today.
Our Picks for the Best High-Yield Savings Accounts of 2024
| Product | APY | Min. to Earn | |
American Express® High Yield Savings
Member FDIC.
APY
3.80%
Rate info
3.80% annual percentage yield as of December 28, 2024. Terms apply.
Min. to earn
$0
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
3.80%
Rate info
3.80% annual percentage yield as of December 28, 2024. Terms apply.
|
$0
|
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
Capital One 360 Performance Savings
Member FDIC.
APY
3.80%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.
Min. to earn
$0
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
3.80%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.
|
$0
|
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
Western Alliance Bank High-Yield Savings Premier
Member FDIC.
APY
4.46%
Rate info
The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
Min. to earn
$500 to open, $0.01 for max APY
Open Account for Western Alliance Bank High-Yield Savings Premier
On Western Alliance Bank's Secure Website. |
4.46%
Rate info
The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
|
$500 to open, $0.01 for max APY
|
Open Account for Western Alliance Bank High-Yield Savings Premier
On Western Alliance Bank's Secure Website. |
CD ladder earnings
One thing to note: to get these rates, you'd need to purchase CDs from different banks. I calculated using the highest annual percentage yield (APY) offers I could find for deposits between $2,000 and $5,000 to see the most you could make. I also compounded the interest monthly, which is how most (but not all) CDs do it.
| Term | APY | Total Earned |
|---|---|---|
| 1 year | 4.60% | $234.91 |
| 2 years | 4.58% | $478.68 |
| 3 years | 3.50% | $552.70 |
| TTotal earned: | -- | $1,031.38 |
With a three-CD ladder, you could earn $1,031.38 over three years and have access to $5,000 each year as a CD matures.
CD rates are weird right now
Generally, APYs are higher for longer-term CDs, but you might have noticed that the 3-year CD rate is actually lower than the 2- and 1-year CDs. That's what experts call the inverted yield curve, and it tends to happen when there is uncertainty about the future of the economy.
Essentially, banks aren't sure how low the Fed will cut its benchmark interest rate (or how long this will take to happen), so they're not willing to risk giving you a sweet 4.60% APY on a CD for many years only to find out later that interest rates will be far lower.
That said, right now might not be the best time to buy longer-term CDs. Rather than buying 1-, 2-, and 3-year CDs, I would probably consider 3-month, 6-month, and 1-year CDs, and then reevaluate once those mature.
Factors to consider when comparing CDs
Most financial institutions offer CDs, so it can be overwhelming to choose between them. In addition to APYs, there are a few other factors to consider when deciding where to park your money. If you want to buy CDs at one bank, you'll want to compare the APYs on different terms to see which works best for you.
If there's a chance you might need to pull your money before maturity, compare the penalties from different banks. Some banks allow you to withdraw your money with little to no penalty (but the offered APYs might be lower). Finally, compare loyalty bonuses. Some banks offer a slight APY boost if you allow your CD to roll over upon maturity.
Ready to lock in higher rates? Don't delay, compare your CD options now.
Our Research Expert
Danielle is a small business and finance industry writer based in Ohio. She writes about tech, finance, and small businesses for Motley Fool Money and other industry publications.
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