On Wednesday, May 20 2009 President Obama signed an extension to the recently increased FDIC limits into law.

This change should provide added peace of mind to consumers looking for a safe place for their deposits.  If you have built a CD Ladder as part of your investment strategy, this is great news (he just gave you an extension ladder…pun intended).

According to the FDIC:

• Deposits at Member FDIC institutions are now insured up to $250,000 per depositor through December 31, 2013.
• These changes supersede the previous extension made on October 14, when the increased coverage limit first came into effect (that increase was initially supposed to end on December 31 of this year.)
• Joint accounts – those accounts held by a married couple, for instance – are covered at twice this level, up to $500,000.

What The FDIC Extension Means for Your CD Ladder

Because you now know your deposits are insured up to $500,000, you may now feel more confident about finding the best CD rates and building a CD ladder as part of your overall portfolio.  In addition to checking the CD rate tables here at RateNerd.com, you can also check out the  live auctions for certificates of deposit (CDs) and high-yield savings accounts at MoneyAisle.com which support these increased FDIC limits.  MoneyAisle.com users can run real-time, live auctions for deposits from $1,000 to $500,000 per account – and every bank in the MoneyAisle network is an FDIC member. (Check out our review here to learn how MoneyAisle works.)

How To Build a CD Ladder

A CD ladder is made up of several Certificates of Deposit which can all be opened at the same time or staggered, and have different lengths of maturity and interest rate yields. A Certificate of Deposit CD ladder can help you earn an even higher return on your savings over time as each step on the ladder represents a different CD term. For example, a long term CD ladder could include 12, 24, 36, 48 and 60-month term CDs. Comparatively, a less aggressive CD ladder can consist of shorter terms – for example, a 6, 12, 18, 24 and 30-month ladder which keeps your money more readily available.

For example, if you have $10,000 to invest and want to start a 5 rung, annual ladder (12, 24, 36, 48 and 60-month CDs), you could invest $2,000 in each term. As each CD matures, you would automatically re-invest the principal and interest into the longest term on your CD Ladder (in this case a 60-month CD). With this scenario, you’ll have the security of at least $2,000 becoming available each year in the event you need access to some of your money, while at the same time having all your money in longer term CDs, which generally pay a higher rate of interest than shorter term CD deposits.

Related posts:

1. How To Build A $10,000 CD Ladder
2. 3.20% APY 60 Month CD Rate For Your CD Ladder – Daily Deal!
3. Your Income Tax Extension Time Is Up
4. FDIC Closes 4 More Banks – How To See If Your Bank Is Solvent
5. 2.05% APY on 9 Month CD, 2.30% APY on 12 Month CD – Daily Deal!

Tagged as: 2009 CD Rates, bank cd, CD Ladder, cds, certificate of deposit, fdic, Interest Rates, MoneyAisle

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