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Banking on Multi-Bank CD Ladders

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Green LadderLast week, George commented in my post detailing how to move your CD ladder explaining that there’s “an implied preference that all CDs in a ladder be at a single institution.”

George is right, everyone implies that your CD ladder is held at a single institution. That is not a requirement of a CD ladder and it’s a case of the money vs. convenience trade-off. You can earn the highest possible rate for your CD or you can have the simplest system… you often cannot have both.

Single-Bank Ladders

There is only one reason – simplicity. There’s value in creating a simple system that is easy to maintain and while that value isn’t quantifiable in dollar figures, the value is there. By having all of your CDs at one bank, you create a system you are more likely to maintain and keep up with. While the amount of work required to maintain a multi-bank CD ladder is hardly back-breaking, it’s less than trivial.

With a one bank CD ladder, you can set your CDs to automatically renew. By turning on auto-renew, you can leave your CD ladder on auto-pilot. You aren’t tempted to mess around with the savings because they are continually renewed into one-year CDs.

With a one bank CD ladder, you can see your entire CD ladder in once place. This helps you keep things in order and lowers the burden on your memory (or your bookkeeping system). Your financial network map is cleaner, easier to understand, and in the event of an emergency, easy to explain to someone else.

Multi-Bank Ladders

A multi-bank ladder sacrifices simplicity for, hopefully, interest yield. By selectively renewing or moving your CD “rungs” at maturity to banks with the best CD rates, you ensure that you will have the highest possible interest rate for your ladder.

The easiest way to manage this type of system is to keep track of it in a separate spreadsheet using a clever naming scheme for your CD rungs. If I were to do this, my tool of choice would be Excel and I’d give my the following naming convention:

  • CD Ladder – XX/XX/XX – 001
  • CD Ladder – XX/XX/XX – 002

The XX/XX/XX would specify the date of maturity and I’d increment the three-digit number by one each time I created a new CD. In my spreadsheet, I’d note which bank the CD was located in. I’d also add a cell that gave me countdown to the maturity plus probably a lot of other useless but personally fascinating numbers like yield, effective APY of the ladder, etc. :)

Do you have a multi-bank CD ladder? If so, I’d love to hear your thoughts on it – was it worth the hassle? Is the amount of effort overblown? Do you recommend everyone do it?

(Photo: Peyman)

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12 Responses to “Banking on Multi-Bank CD Ladders”

  1. billsnider says:

    I use to have a multi ladder CD approach but have been not doing it as the CD’s expire. The big reason is that the yields are not there at this time.

    The reason i did this was two fold…

    1) The FDIC limit was $100,000 per person per account type and…

    2) Banks were constantly featuring specials that were significantly above everyone else.

    Was it worth it? Sure. If I got 0.1% higher on $100,000, this put $100 in my pocket. The amount I was getting was much higher. I looked at this as a job. So it was not much of a hassle.

    Bill Snider

    • cdiver says:

      A job well worth the effort. $100 for each 10 basis points on each jumbo cd. Kind of like a one time gig making a $100 an hour.

      • billsnider says:

        I have been told by many people that they can’t be bothered to do a little work to make this easy money. I then ask them if they would pick up a $100 bill if I drop it. They always say SURE THING. So I then say to them isn’t this the same thing? They usually say no.

        I don’t get people.

        Bill Snider

  2. Anthony says:

    I keep all of my CD’s at Ally Bank. I do this for the simplicity. But also, I chose a bank that had higher yielding CD’s. Will I hop around later if there are (significantly) better rates elsewhere? Maybe.

  3. daenyll says:

    I had my partial ladder at ING and HSBC, whichever had the better interest the month I was starting, but since the changes to HSBC and the drop in rates I’m moving back to fully ING. This way I can maintain a reasonable rate while having everything in the same bank as my account used to pay off student loans. This way I can easily transfer interest money to the loan payment at maturity, or in case something happens and I need to break a CD rung.

  4. Gail says:

    I have CD ladder at Ally Bank, but I don’t like the idea that when receiving your 1099INT at tax time, they mail one 1099 for EACH CD account; hence twelve 1099s are mailed at the end of the year. I also have CDs at ING and everything from ING is on one statement and 1099s are together and mailed once.

  5. Mark says:

    Currently my CD Ladder (which I refer to as a CD Matrix) includes 60 CD’s. Basically, one CD comes due every month for the next 5 years. The idea is that when it comes due I just roll into another 5yr CD and move on. I started the matrix at ING, hit the 50 CD limit (didn’t know they had one) and finished it off with 10 more at Ally. I use an Excel spreadsheet to track them, but now that I have them all set up, I don’t need to really do much. Yes, this is probably not the greatest way to make money, but its safe and easy and every month I have the option of getting some extra income (the interest) or just rolling it forward. Im 30something now, and hope the matrix just grows for 15-20 years until I actually need it to pay me.

    • iwant2brich says:

      How long did that take you to make? I assume 5 years, right? Just curious, how much are the CDs for? I have only 1 2-yr CD at ING. Its a 2-yr at 4.25%, I put 15K in it. Do you, or anyone else, recommend just buying 500 or 1K CDs and building a ladder with those, instead of 1 large CD? Thanks!

      • Jim says:

        It should only take a year to make a ladder like that, you just open a 5-year, 4-year, 3-year, 2-year, 1-year every month for a year and you’ll have 60 CDs. You can be even faster if you open 18-month CDs too.

  6. eric says:

    It is a bit of a pain to me, enough that I keep putting it off.

  7. Allie says:

    I use a ledger book that has 13 columns across and 40 down. I just number the CD’s 1-2-3-etc
    Each page has a CD. I put the bank name, phone number acct # purchased amount, date purchased APY, maturity date and then I number the years for the interest earned each year and end of year worth. Then a column for date cashed in and amount. They I draw a line and start over with where ever or what ever I do with the money.
    I also have a page where I put the names of each bank or credit union at the head of the column and then number the Cd’s down the page and put the amount under the corresponding column. This tracks for FDIC insurance.

    My last page had all the CD’s and I number them by when they are due in order. I also put this on a calender in red and 2 weeks before it is due I post it in green to remind myself to start looking for rates.

    If you can put a program on a spreadsheet like this somehow or know where I could get one I would appreciate it if you would let me know. We are in 30 banks and havae 84 CD’s.


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