CD Ladder Builder: Total Interest, Maturity Schedule, Blended Yield
TL;DR: A CD ladder splits your principal across multiple maturities so something is always coming due, giving you liquidity AND yield. Build a 3/5/7-rung ladder with your current rates and see total interest, the maturity schedule, and the blended yield. Then compare against a same-term MYGA.
How this calculator works
Equal principal is allocated to each rung (1-yr, 2-yr, 3-yr, etc.). Each rung compounds at its own rate for its own term:
Rung_i maturity = (Total / k) × (1 + r_i)^i
Where k = number of rungs and r_i is the rate for the i-year CD.
Total interest = sum of (each rung's maturity minus principal).
Blended yield is computed by finding the single annualized rate that would equal total maturity value if held for the average term:
Blended = (Total maturity / Total principal)^(1/avg_term) - 1
Where average term is (1 + k) / 2, the simple average of all rung lengths.
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What the result means
Total interest earned is the sum of all rungs' interest over the full ladder period. Compare this to what a single 5-yr CD or MYGA would earn for the same principal.
Blended yield tells you the effective annualized rate of the ladder. It is usually 20-40 bps lower than the longest rung (because shorter rungs drag the average down).
Maturity schedule shows when each rung pays out. As each matures, you can spend, roll into a new longest-rung at then-current rates, or move into a MYGA.
When MYGA wins / when the alternative wins
CD ladder wins when: you want FDIC backing, predictable maturities for rolling cash needs, and don't mind taxable interest each year.
Single 5-yr MYGA wins when: you want a higher rate (typically 100-200 bps above 5-yr CDs), tax deferral, and don't need staged liquidity beyond the 10% free withdrawal.
MYGA ladder wins when: you want both staged maturities AND the MYGA rate premium AND deferral. Common: 3/5/7-yr MYGA ladder at 5.50%/5.85%/5.95%.
Treasury ladder wins when: you're in a high state-tax state (Treasuries are state-tax-exempt) and willing to accept lower nominal yields.
Worked example
Scenario: $500,000 to ladder over 5 rungs (1-5 yr).
- $100K @ 4.95% / 1yr → matures $104,950
- $100K @ 4.50% / 2yr → matures $109,203
- $100K @ 4.30% / 3yr → matures $113,461
- $100K @ 4.25% / 4yr → matures $118,070
- $100K @ 4.40% / 5yr → matures $123,997
Total maturity: $569,681. Total interest: $69,681. Blended yield: ~4.40%.
Compare to single 5-yr MYGA at 5.85%: $500,000 × 1.0585^5 = $664,920. Interest: $164,920. MYGA wins by $95K, and that's before the tax-deferral advantage on after-tax math.
Common mistakes
- Buying brokered CDs without checking call features. Some "5-yr 5%" brokered CDs are callable after 6 months. The bank yanks it back when rates drop.
- Not accounting for tax drag on each year's interest. $69K of CD interest over 5 years gets clipped 25-35% in fed+state tax. Real after-tax interest can be $45K-$50K.
- Forgetting reinvestment risk. When the 1-yr rung matures and you roll into a new 5-yr at then-current rates, those rates could be much lower.
- Spreading across too many banks for FDIC limits. Use brokered CDs through a single brokerage account: one statement, FDIC up to $250K per bank automatically.
- Comparing CD ladder to a single MYGA without including tax. The MYGA win usually doubles on an after-tax basis for anyone in a 22%+ bracket.
Related calculators & reviews
- MYGA Growth Calculator
- MYGA vs CD After-Tax Calculator
- MYGA Monthly Income Calculator
- Annuity Payout Calculator
- Social Security Bridge Calculator
FAQ
Q: What's the optimal number of rungs?
A: 5 is the sweet spot for most retirees. It balances yield, liquidity, and complexity. 3 rungs for shorter horizons; 7-10 for longer.
Q: Should I use brokered CDs or bank-direct CDs?
A: Brokered CDs (via Schwab/Fidelity) usually pay higher rates but are sold via secondary market, so they are subject to price movement if sold pre-maturity. Bank-direct CDs are simpler with smaller early-withdrawal penalties.
Q: Can I build a MYGA ladder?
A: Yes. Same principle, higher yields. 3/5/7-yr MYGAs from A-rated carriers often yield 100-200 bps above same-term CDs.
Q: What about an early-withdrawal penalty on CDs?
A: Standard penalty: 6-12 months of interest for early withdrawal on bank-direct CDs. Brokered CDs have no penalty, but you sell at market price, which can be a loss if rates rose.
Q: Should I include T-bills in the ladder?
A: T-bills are great for the 1-2 yr rungs in high state-tax states. The state-tax exemption can outweigh slightly lower nominal yield.
Q: Are ladder rates locked at issue?
A: Yes. Each rung's rate is fixed at the time you buy that CD. As rungs mature and you roll into new ones, you take whatever rate is then current.
Q: What's a barbell vs ladder?
A: Barbell = principal split between only short-term (1-yr) and long-term (10-yr) rungs, skipping middle. Ladder = even spread. Barbells make sense in flat yield curves; ladders in normal-shaped curves.
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Disclosure
This calculator is for educational and illustrative purposes only and is not a personalized recommendation, solicitation, or offer of any specific product. Outputs are approximations using publicly available rates, IRS tables, and standard payout factors as of 2026; actual carrier illustrations may differ. Annuity rates, caps, payout factors, surrender schedules, and tax brackets change frequently. Always confirm current values against the most recent carrier disclosure document, IRS Publication 590-B, and the actual contract before purchasing. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers. Tax discussion reflects federal law as of 2026 and is subject to change. Consult a CPA and licensed advisor before acting on any output shown.