How to be a Saver in Times of Rising Interest Rates

Interest rates are starting to rise and are likely to head even higher, which means it’s time to build a ladder so you can climb with them.  A ladder? you ask.  I’m talking about a Certificate of Deposit (CD) ladder.

If you’re not familiar with the term, I don’t blame you.  It’s been so long since CD laddering was financially relevant that the last time I saw the term in print, the financial magazine had “housing bubble bursts” bold across its cover.  But rising rates brings new dilemmas for savers, and a CD ladder is an old-school way to ensure you don’t miss out on interest income.

Here’s how it works:  Since you are typically paid a higher yield for longer-term CDs, but longer term CDs may cause you to miss out on rising rates, a CD ladder finds a happy medium between the two. With a CD ladder, you buy smaller CDs that mature at staggered dates.  I like to keep things simple, so here’s how I create a CD ladder: Split the funds I wish to invest 5 ways, and then put equal amounts into 12-month, 24-month, 36-month, 48-month, and 60-month CDs.  When each CD matures, I reinvest it into a 60-month CD.  Now, there is one CD maturing each year and the funds invested are able to climb with the interest rates.

By Adam Lucas Adam Lucas holds a Finance degree and an MBA from the University of Kentucky. His work has appeared in many major outlets including Yahoo,, and
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