Laddering is based upon the premise of not putting all your eggs in one basket, or in this case, all your money in a single CD. By dividing your money between CD terms ranging from short to long you are purchasing CDs with a range of yields that reflect market expectations for the future direction of interest rates. The CD ladder actually puts the market to work for you.
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- High blended rate right from the start: When you blend or average the rates paid on each of the CDs in your ladder, you see the immediate benefit of earning interest at a rate that is higher than the shortest CD in your ladder. This means you’re immediately earning more interest each month.
- Dependable return that comes with guaranteed rate CDs: You cannot and will not ever lose the principal invested in your Dollar Bank CD Ladder, unlike some investments in the stock market or mutual funds. The amount of money that you use to open your CDs, as well as the interest you earn on that balance, is guaranteed. This means that not only is there no risk of losing money, but there is also no risk of earning less than you anticipated when you opened your CD ladder.
- Know that you are prepared for interest rate changes, whether up or down: If interest rates go up, you can take advantage of the change because a portion of your CD Ladder investment is available to be reinvested every 6 or 12 months. On the other hand, if interest rates go down, you won’t suffer an abrupt decrease in your interest earnings because several of the CDs in your ladder will continue to earn at the higher rates you previously locked in.
- Access to a portion of your money every 6 or 12 months: The flexibility provided by a CD ladder is ideal for people who like the security of knowing that their money is available if they need it. When opening a CD ladder, you decide how much and how often you want money to be available to you.
- Security of an FDIC insured investment: FDIC insurance is provided on every deposit product offered at Dollar Bank including CD ladders.
- No fees or service charges: Unlike most investment alternatives, there are no management fees, sales loads or other charges for this account.