CD Ladder Formula
The CD Ladder Formula helps you calculate the weighted average yield across all the certificates of deposit (CDs) in your ladder. This provides a realistic understanding of the blended return you can expect from your staggered maturity strategy.
Formula
Copy the exact expression or work through it step by step below.
Weighted CD Yield = Sum of (Deposit Allocation x CD Rate) / Total Deposits Variables
WCY
Weighted CD Yield
The weighted cd yield value plugged into the cd ladder calculation.
DA
Deposit Allocation
The deposit allocation value plugged into the cd ladder calculation.
CR
CD Rate
The cd rate assumption used in the cd ladder calculation.
TD
Total Deposits
The total deposits value plugged into the cd ladder calculation.
Step By Step
- 1
Set the baseline case with the real calculator inputs.
Total Deposit = $25,000, Rungs = [{"term_months":12,"apy_percent":4.5},{"term_months":24,"apy_percent":4.7},{"term_months":36,"apy_percent":4.8},{"term_months":48,"apy_percent":4.9},{"term_months":60,"apy_percent":5}]
- 2
Translate rates, periods, and cash values onto the same footing before combining them.
Keep the cd ladder assumptions consistent instead of mixing monthly and annual views.
- 3
Apply the formula and read the first calculator outputs, not just the headline assumption.
The calculator lands with total interest earned at $3,897 and total maturity value at $28,897.
- 4
Run one changed scenario so the formula is stress-tested before it is trusted.
The cd ladder calculator page is the fastest way to compare that second case.
Worked Example
CD Ladder sample case
Total Deposit
$25,000
Rungs
- #1
Rungs 1
- Term Months
- 12
- Apy Percent
- 4.5
- #2
Rungs 2
- Term Months
- 24
- Apy Percent
- 4.7
- #3
Rungs 3
- Term Months
- 36
- Apy Percent
- 4.8
- #4
Rungs 4
- Term Months
- 48
- Apy Percent
- 4.9
- #5
Rungs 5
- Term Months
- 60
- Apy Percent
- 5
Weighted CD Yield = Sum of (Deposit Allocation x CD Rate) / Total Deposits using total deposit $25,000, rungs [{"term_months":12,"apy_percent":4.5},{"term_months":24,"apy_percent":4.7},{"term_months":36,"apy_percent":4.8},{"term_months":48,"apy_percent":4.9},{"term_months":60,"apy_percent":5}].
The calculator lands with total interest earned at $3,897 and total maturity value at $28,897.
Common Variations
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Sources & References
- CD Ladder Strategy: What It Is And How To Build One — Bankrate
- CD Ladder: What It Is, How It Works, and How to Build One — Investopedia
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