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Creating a CD Ladder

CD Laddering...a great goal-oriented investment strategy.

Are you beginning to plan for a future need? Soon to be paying for a college education? Planning to buy a new car, home appliance or make major home renovations? The concept of CD laddering allows you to plan out and stagger the availability of your investments.

CD laddering is an excellent tool for managing your liquidity because you structure your investments like rungs or steps on a ladder. Rather than placing all your CD money into one term, at one rate of interest, you schedule CD maturities to coincide with your needs.

Using the CD laddering concept you’ll be able to better manage the availability of your money and possibly even attain better rates of interest by extending some of your CDs out longer in term. You are in control of selecting the best CD term and maturities to suit your plans and goals.

CD Laddering Example:

To create your CD ladder, open multiple certificates of deposits (CDs) at the same time at varying terms. It's an FDIC-insured investment plan used to earn a higher average rate of return, minimize interest rate risk, and provide you with easy access to your money at planned intervals.

For example, you start an annual ladder consisting of a 1, 2, 3, 4 and 5 year CD with an initial deposit of $2,000 into each term. When each CD matures, you reinvest the principal and interest into a new term, one year beyond the previous longest term:

1 Year CD matures in 2011. At renewal, roll into a new 5 Year CD that matures in 2016.
2 Year CD matures in 2012. At renewal, roll into a new 5 Year CD that matures in 2017.
3 Year CD matures in 2013. At renewal, roll into a new 5 Year CD that matures in 2018.
4 Year CD matures in 2014. At renewal, roll into a new 5 Year CD that matures in 2019.
5 Year CD matures in 2015. At renewal, roll into a new 5 Year CD that matures in 2020.

Typically, longer term CDs in your ladder will have a higher rate of return than shorter-term deposits.

How many CDs are in a ladder?

Your ladder can consist of as few or as many CDs as you wish. Please speak with a customer service representative at your local branch to determine the best ladder for you.

How do I choose the terms for my CD ladder?

You are in control of selecting the best CD term and maturities to suit your plans and goals. Choose CD terms based on how frequently you want funds available.

What happens when CDs mature?

Visit your local branch or call our Direct Banking Center to reinvest your CD proceeds for a term beyond the longest term on your ladder to maintain the same CD laddering effect - otherwise the CD automatically rolls into the same term.

 

Member FDIC. Each Certificate of Deposit (CD) has minimum deposit requirements and is individually subject to early withdrawal penalties. Typically, CDs automatically renew for the same term. To change the term of your CD (and maintain your ladder) you must contact your local branch within 10 days of maturity. For current rate information or Account Agreement Disclosure information, please call our Direct Banking Center at 1.800.FULTON.4 (1.800.385.8664) or see your local branch for more details.

Schedule investment maturities to meet your needs.