A deposit ladder splits savings across deposits of staggered lengths — as each rung matures you reinvest at the long end, capturing long-term rates while cash frees up regularly.
The ladder solves the lock-up dilemma: all-short earns little, all-long locks everything away. The blended rate sits between the two while a rung matures every cycle.
The projection assumes today's rates hold at renewal; in practice rungs renew at whatever the market then offers — which is also the mechanism that protects you if rates rise.
The ladder is a decision about reinvestment risk, not a way to earn more. If rates fall, the long rungs locked in before the fall are what carry the blended yield; if they rise, the short rungs renew into the better market. Neither outcome is predicted — the structure simply avoids betting everything on one of them.
Deposit protection is worth checking against the rung sizes rather than the total. Guarantees are per depositor per institution — €100,000 across the EU, £85,000 in the UK — so a large ladder concentrated at one bank protects less than the same ladder spread across several.
Early access is the cost the structure is paying to avoid. Breaking a fixed deposit usually forfeits some or all of the accrued interest, so the ladder should be sized so the regularly maturing rung covers foreseeable needs and the emergency fund sits outside it entirely.
Frequently asked questions
What is a term-deposit ladder?
Savings split across deposits of staggered maturities — say one to five years. As each rung matures you reinvest at the long end, so cash frees up regularly while most money earns long-term rates.
Why not just pick one long deposit?
Locking everything away risks needing the money early (penalties) and freezes today's rate. All-short instead earns little. The ladder blends the two and averages your reinvestment rates.
What happens when a rung matures?
You reinvest it at the ladder's longest maturity at whatever rates then prevail — which is also the built-in protection: if rates rise, a rung soon captures them.