What Is a Share Certificate ladder?

Growing stacks of coins with small plants on top

Ever heard of laddering your certificates? A Share Certificate ladder is an investment strategy with both short- and long-term benefits. As you probably know, a share certificate, often referred to as a certificate of deposit at a bank, pays a fixed dividend rate or rate of interest for a specific period of time or term. The ‘laddering’ method combines shorter term share certificates that offer lower rates and more frequent access to your money, with longer term share certificates which earn more but offer less access to your money.

Creating a share certificate ladder is easy to do, and can be set up through the credit union using regular share certificates. To create a share certificate ladder, purchase several certificates with staggered maturity dates. The most common certificate ladders are set up to mature on a monthly, quarterly, or annual basis, however, you can modify the ladder to suit your needs. As each certificate matures, you can either put the money back into the ladder, or cash out and use the funds.

Building the Ladder

Here’s an example of an annually-maturing share certificate ladder: Let’s say you have $5,000 to invest, so you’ll purchase five $1,000 share certificates. The first certificate will mature in 12 months, the second in 24, the third in 36, the fourth in 48 and the final certificate will mature in 60 months. After a year has passed, your 12-month certificate has matured. Typically, if you don’t need the funds, you can put the money back into the ladder by purchasing a new 60-month share certificate. From then on, you add a new rung to the ladder with the purchase of a new 60-month share certificate every year as your next certificate matures.

12 months 24 months 36 months 48 months 60 months 60 months
$1,000 $1,000 $1,000 $1,000 $1,000

Certificate Ladder JPG

For this reason, you don’t want all of the certificates to automatically roll into the original maturity.  The exception to this is the 60-month certificate – automatic rollover works perfectly in this case to support the ladder approach.

While you can choose to have dividends paid to you or to compound them, many members find that getting the dividends paid to them monthly adds to their income stream.  At Patriot, dividends can automatically be paid monthly by transfer from the certificate to another share account.

This laddering technique allows you to not only lock in some higher rates associated with long-term share certificates, but the short-term certificates mean you are able to take advantage of the market, should rates rise. Additionally, since you don’t tie up all your money, you are never more than a year away from at least some of it, as in the case of an annually-maturing ladder. The early withdrawal penalty is based on the term of the share certificate.

The minimum deposit to open a certificate is $1,000 at Patriot Federal Credit Union and the dividend rate is fixed during the term. Patriot also offers a Continuous Saver Certificate with a fixed dividend rate, but also offers members the ability to make deposits into the certificate.

If you’re interested in setting up a certificate ladder, please visit any Patriot branch or call us at 888-777-9982.


  • NCUA

    This credit union is federally insured by the National Credit Union Administration.

  • Equal Housing Lender

    Equal Housing Lender

You might like ...

Here are a few other resources you might enjoy.