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Could You Be Saving More with a Share Certificate Ladder?

Published: August 12, 2019

What is a SC Ladder?

Share Certificates (SC) typically offer higher interest rates than regular savings accounts in return for locking in your money for a set time period. The longer that maturity period is, the higher your earnings. However, if you put all your money in one long-term SC and interest rates rise before its maturity date arrives and you miss out on the chance to take advantage of those higher rates. In the case of an emergency, you won’t be able to access that cash without withdrawing the entire amount and getting hit with penalties on your earnings.

Laddering is the perfect way to get around this dilemma. Rather than buying one large SC, this strategy involves purchasing multiple SCs with staggered maturity dates. That way, a portion of your cash is freed up each year for you to reinvest in another SC at current rates or use for other purposes.

Traditional SC Ladder Model

A traditional SC Laddering Model has five “rungs.” Each of these rungs represents a SC of equal value, and their terms are staggered so that one SC matures every year. For five years, for example, you could invest $5,000 this way:

$1,000 in a 12-month SC.

$1,000 in a 24-month SC.

$1,000 in a 36-month SC.

$1,000 in a 48-month SC.

$1,000 in a 60-month SC.

When the 12-month SC matures, you can then use that cash to purchase a new 60-month SC that will mature in year six, and continue this way so you get both the high returns that the longest-term SCs offer and the flexibility of having one-fifth of your investment freed up each year.

Other laddering approaches

Laddering doesn’t have to be one size fits all. Those who can’t tie up money for a whole year might do well with a four-rung ladder consisting of a three-month, six-month, nine-month and 12-month SC so that cash is freed up every three months. Or, if you may need cash more frequently, build your ladder so that one SC matures each month.

Another thing to consider is changing economic projections. When times are uncertain, a SC ladder with equal rungs is the safest overall plan. However, if interest rates are clearly rising, you might want to invest a larger portion of your ladder fund in short-term SCs to take advantage of better offers as they become available. When interest rates are falling, it pays to invest as much as possible in long-term SCs, since you may not have an opportunity to lock in such good rates again for a long time.


Whichever approach you choose, SC laddering offers a number of advantages over purchasing a single SC:

Higher Income Plus Liquidity: Once your first SC matures, you’ll enjoy long-term SC rates without giving up frequent access to your cash.

Flexibility: You’ll be able to adjust your ladder to changing economic conditions and your individual financial situation.

Peace of Mind: Whatever happens, you’ve got it covered. When rates drop, you’ve already locked in your return. And when rates rise, you’ll have available cash to invest regularly.

Start building your SC ladder with USSFCU 5-year Share Certificates that are ranked #1, 2 & 3 in the entire nation!

"When compared to the other similar length-of-term CDs tracked by that are nationally available, all of United States Senate Federal Credit Union's 60-month Share Certificate APY tiers currently rank in the top three, regardless of minimum deposits."

- Ken Tumin,, as of 8/03/2018

To view USSFCU’s SC Rates visit our Rates Page

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