Why Ladder Rather Than Lock One Term
Locking a single 5-year CD captures the 60-month yield today but exposes the full principal to the reinvestment rate in year 5. A ladder splits a $600,000 USD reserve into six $100,000 USD tranches across 3, 6, 12, 24, 36 and 60 months. Every three or six months, one tranche matures — the principal either rolls into a fresh 60-month at the then-current SinglePoint rate, or transfers to operating checking if needed.
The blended yield of a ladder approaches the long-dated rate while keeping a steady cadence of maturity dates. When rates rise, new tranches renew at higher rates inside SinglePoint. When rates fall, the already-locked long tranches continue earning the higher prior rate. This is the classic case for laddering and it applies equally to treasury reserves and corporate working capital.


