Isn’t it satisfying to “level-up”? As a child, I remember the thrill of watching Mario finally capture the flag at the castle and advance to the next level. In college, it was a relief to progress beyond the 1000 classes, to get into more meaningful coursework. As an adult, it’s a badge of honor to move through the ranks of rewards programs with the goal to achieve, for example, Delta’s Platinum Medallion Status, Chick-fil-A’s Signature Member Status, or for me, the quintessential Disney Cruise Line’s Castaway Club Pearl Member.

Did you know you can experience a similar sense of accomplishment with your investments?

In a previous article, “Get to Know CDs, The Financial Kind,” we covered the basics of certificates of deposit (CDs). As a recap, a CD is a savings account where you agree to deposit a set amount of money (called your principal investment, or just principal) at a financial institution for a set period (the CD term). For your commitment, the financial institution pays you a higher interest rate.

This is a great financial tool when you have a clear financial goal, timeframe and the money to allocate.

But, how can you up-level your CD strategy? Depending on your financial goals and needs, several approaches can help you do more with this financial tool.

Step Up Your Savings with CD Laddering

Want a balance of stability and access to your money? A CD ladder might be the answer.

A CD ladder is an investment strategy where you divide your savings into multiple CDs with staggered maturity dates, as opposed to putting all your money into one CD at a single term. For example, if you have $50,000 to invest, you could create a CD ladder by purchasing five $10,000 CDs with maturity dates of 1, 2, 3, 4 and 5 years.
Then, imagine it as a game of leapfrog: each CD is a player, ready to jump into a new CD as the previous one matures — if you want it to or you could refine your strategy.

What Happens When a CD in Your Ladder Matures?

When a CD reaches maturity, it’s your chance to adjust your investment plan. Start by asking:
  1. Do I have any immediate needs for the funds? If so, you can choose to withdraw just the interest you’ve earned while keeping your initial investment in the CD to earn more, or you can withdraw both the interest and the principal. If not needed, you can renew the CD with everything in it, or take some out to purchase another CD.
  2. Are interest rates better for short-term or long-term CDs? Do you want to lock your money in for a longer time for potentially higher returns, or have the flexibility of shorter-term CDs for more immediate gain?
Now that you know more about the CD laddering strategy, let’s explore why it can be a smart financial move, with four key advantages.

4 Benefits of a CD Ladder

  1. Diversification: By spreading your money across various maturity dates, you reduce the risk of interest rate fluctuations. If rates rise, you can reinvest maturing CDs at higher rates. If rates fall, you'll still benefit from the higher rates on longer-term CDs.
  2. Liquidity: Unlike a single long-term CD, a CD ladder provides access to a portion of your funds regularly as CDs mature. This can be helpful for unexpected expenses or planned purchases.
  3. Predictable Income: CDs offer fixed interest rates, providing a steady income stream. A CD ladder amplifies this benefit by helping you maintain a consistent cash flow over time.
  4. Safety: CDs are FDIC-insured up to $250,000 per institution you invest with, making them a relatively safe investment option.
As life changes your CD ladder can continue to level up with you, providing ongoing access to funds and the flexibility to either enjoy the rewards or reinvest for future growth.

Supercharge Your Savings with Special CD Structures

While a ladder is a great way to level-up on your own terms, also keep an eye out for CD options that financial institutions create to help you boost your CD usage. For example, Bank of Utah offers a Super Saver CD. Unlike traditional CDs where you lock in a specific amount upfront, the Super Saver lets you add funds over the life of the term.

So, let’s say you’re saving for a down payment for a home. You’re already pulling a set amount out of every paycheck to help you grow your funds. With a traditional CD, you can lock in a portion of your savings to earn a higher interest rate, but any additional funds you save for the down payment would possibly earn a lower rate in a regular savings account. With the Super Saver, you commit the money for a year, and every month of that term, you can contribute more of your savings. Every dollar you contribute earns the higher CD interest rate, maximizing your savings potential.

Having explored CD laddering and special CD structures, now let’s talk about the mechanics behind your earnings. By thoroughly understanding CD interest income, you can pick the best plan for your savings goals and optimize your returns.

Understand CD Interest Income

When you open a CD, pay attention to two key numbers:

  1. The interest rate. This is what your principal — that initial investment you made — will earn over the life of the CD
  2. The APY, or annual percentage yield. This is the total amount you’ll earn on your CD over a year. It includes something called compound interest, which means your earnings also earn money. To achieve the APY (consider this the basic level-up approach), leave the CD fully intact for the term — no early withdrawals. This way, the small amount of interest you earn on day 1 will grow and grow, finally adding up to the promised APY.

Sometimes it’s helpful to have access to that interest, though. When you create your CD, check with the financial institution to see if you can receive your interest payments regularly, over the life of the CD. Many institutions pay out interest quarterly, should you choose. But note, if you do, you won’t achieve the APY. If your goal is to have your money earn money that you can access right away, that’s OK. If your top priority, though, is to maximize your overall return, resist the urge to withdraw the interest and let your money compound.

Choose the Right Financial Partner

While rate is the most compelling reason to choose a financial institution for a CD specifically, the best level-up strategies include doing some additional due diligence. At Bank of Utah, we help people across the nation invest in CDs. We get the following questions consistently from savvy CD investors, and we love that they want to get to know us before getting an account here.

  1. How long has the institution been in business?
  2. What is the feedback on this institution (look at the Bauer rating, customer reviews, recent awards, etc.)
  3. Are accounts at this institution FDIC insured?
  4. What is the process to add a secondary signer or beneficiary?
  5. What is the process to get the funds out at maturity?
  6. Can interest be paid out throughout the term?

Final Thoughts

Unlike playing Mario Brothers, advancing beyond 1000 level college courses or achieving the next status level in rewards programs, leveling-up your CD strategy isn’t a designated linear path. It can be tailored to your goals and how accessible you need your money to be.

Don’t feel like you need to go this alone. Our banking experts are always happy to talk through your goals and provide guidance on how to get started.


Mary McBrideMary McBride is Vice President of Digital Experience and Sales at Bank of Utah. She loves finding ways to ensure the Bank’s digital channels give customers the information, tools and resources they need. Mary is a mother of two who loves exploring the trails in our great state with her husband and kids. A Disney enthusiast, she also has fun trying to level up to Disney Cruise Line's Pearl status.