Ladder High Yields: How to Maximize CD Returns in a Volatile Rate Environment

In June 2025, certificate of deposit (CD) rates remain robust, with top institutions like Marcus by Goldman Sachs and Popular Direct offering APYs as high as 4.40% for shorter-term deposits. Yet, as the Federal Reserve hints at potential rate cuts, investors face a dilemma: lock in today's high yields with long-term CDs or prioritize liquidity to capitalize on future opportunities. The answer lies in CD laddering, a strategy that balances returns, safety, and flexibility. Here's how to structure it effectively.

What Is CD Laddering?

CD laddering involves dividing funds into multiple CDs with staggered maturity dates. For example, instead of putting all savings into a single 5-year CD, you might invest in 3-month, 6-month, 9-month, and 1-year CDs. As each CD matures, the principal is reinvested into a new CD with the longest term in your ladder. This approach mitigates the risk of missing out on rising rates or needing liquidity during a locked-in period.

Why Short-Term CDs Now?

The current environment demands caution. While short-term CDs from institutions like Marcus and Popular Direct offer compelling yields—such as 4.40% APY for 14-month CDs and 4.40% for 3-month CDs, respectively—the Federal Reserve's potential rate cuts make long-term CDs risky.

Key advantages of short-term CDs:
1. Higher Returns for Liquidity: Shorter terms often offer competitive APYs. Marcus's 14-month CD, for instance, matches the 4.40% of its 6-month CD, while Popular Direct's 3-month CD ties its 1-year rate.
2. Flexibility: Maturities every few months allow reinvestment at potentially better rates if the Fed pauses or reverses course.
3. Lower Penalty Risk: Early withdrawal penalties are smaller for shorter terms. Marcus's 6-month CD, for example, charges penalties based on days, whereas its 5-year CD penalizes 365 days of interest.

Institutions to Watch in 2025

Marcus by Goldman Sachs

• Standout Features:
• APY Range: 3.75%–4.40% (up to 14 months).
• Minimum Deposit: Just $500, making it accessible for smaller savers.
• No-Penalty Options: CDs like the 7- or 13-month terms allow withdrawals after 7 days without penalty, though APYs are slightly lower.

• FDIC Insurance: Up to $250,000.

• Ideal For: Building a ladder with 6-month, 9-month, and 14-month CDs to balance returns and liquidity.

Popular Direct

• Standout Features:
• APY Range: 4.40% (3 months) to 4.05% (5 years).
• Minimum Deposit: $10,000, which limits its appeal to investors with larger sums.

• Penalties: Higher for long-term CDs (e.g., 730 days of interest for 60-month terms).

• Ideal For: Short-term ladders with 3- and 6-month CDs, leveraging its high APY for quick reinvestment opportunities.

How to Build Your Ladder

1. Start Short: Begin with 3- to 6-month CDs from Popular Direct or Marcus's 6-month offering. This keeps liquidity high while earning 4.40% APY.
2. Add Medium-Term: Layer in 9- to 14-month CDs at Marcus for slightly higher APYs (4.30%–4.40%) without locking funds too long.
3. Anchor with Moderately Long-Term: Include a 12- to 18-month CD (e.g., Marcus's 14-month CD at 4.40%) to capture peak yields. Avoid longer terms unless rates drop further.

Example Ladder for $10,000:
- $2,500 in a 3-month Popular Direct CD (4.40% APY).
- $2,500 in a 6-month Marcus CD (4.20% APY).
- $2,500 in a 12-month Marcus CD (4.25% APY).
- $2,500 in a 14-month Marcus CD (4.40% APY).

As each CD matures, reinvest the principal into a new 14-month CD, extending the ladder's length while maintaining liquidity.

Risks and Considerations

• Penalties: Avoid early withdrawals unless absolutely necessary. Marcus's penalties for short-term CDs are minimal, but Popular Direct's 3-month CD charges 89 days of interest.
• Minimum Deposits: Popular Direct's $10,000 requirement may exclude smaller investors, making Marcus the better choice for most.
• Rate Cuts: If the Fed reduces rates, long-term CDs locked in at today's rates will still outperform new purchases. However, laddering ensures you're not fully exposed.

Conclusion: Ladder Now, Adapt Later

In a volatile rate environment, CD laddering is the safest path to maximizing returns. Focus on short- to medium-term CDs with institutions like Marcus and Popular Direct, prioritizing liquidity and FDIC insurance. Avoid long-term CDs unless you're certain rates will fall further—waiting could let you reinvest at better terms.

By structuring your ladder strategically, you'll balance safety, returns, and flexibility—the perfect trifecta for 2025's uncertain market.

Always verify the latest rates and terms directly with the institutions, as APYs can change.