Rolling CD

Rolling CDs (also called CD laddering) is a smart savings strategy that gives you the best of both worlds: higher yields than savings accounts with regular access to your money. Instead of locking up all your money in one long-term CD, you spread it across multiple CDs with different maturity dates.

How Rolling CDs Work:

1. Split your money across 3-6 CDs with different terms (3 months, 6 months, 1 year, 2 years)
2. As each CD matures, you have cash available for emergencies or opportunities
3. Reinvest maturing CDs into the longest-term CD to maintain the ladder
4. Repeat the cycle to maintain consistent access to funds

Example Setup ($10,000 total):

• $2,000 in 3-month CD (4.5% APY)
• $2,000 in 6-month CD (4.7% APY)
• $2,000 in 1-year CD (4.8% APY)
• $2,000 in 2-year CD (5.0% APY)
• $2,000 in 3-year CD (5.1% APY)

Benefits: ✅ Higher yields

• CDs typically pay 0.5-1% more than savings accounts ✅ Regular liquidity
• Money becomes available every 3-6 months ✅ Interest rate protection
• Lock in rates before they fall ✅ Emergency access
• Can break CDs (with penalty) if needed ✅ Automatic reinvestment
• Maintains the ladder structure

Best For:

• Emergency funds beyond 3-6 months
• House down payment savings (2-5 years out)
• Medium-term goals (1-5 years)
• Conservative investors who want guaranteed returns
• People who want better returns than savings accounts

Considerations: ❌ Early withdrawal penalties

• Usually 3-6 months of interest ❌ Interest rate risk
• May miss out if rates rise significantly ❌ Minimum deposits
• Most CDs require $500-1,000 minimum ❌ Less flexibility
• Can't add money to existing CDs

Rolling Strategy: When a CD matures:

1. Use the money if you need it for your goal
2. Reinvest in the longest-term CD to maintain the ladder
3. Adjust the ladder if your timeline or goals change

The Bottom Line: Rolling CDs are perfect for money you'll need in 1-5 years but want to earn more than a savings account. The regular maturities give you flexibility while the longer terms provide better yields. It's a conservative strategy that balances growth with accessibility.