FD Laddering
Definition
Splitting a lump sum across several fixed deposits with staggered maturity dates, reinvesting each as it matures — balancing returns with regular liquidity.FD laddering is a strategy of dividing a lump sum across multiple fixed deposits with staggered maturity dates rather than one single FD. As each deposit matures, you reinvest it into a new longer-tenure FD. This gives regular access to a portion of your money (liquidity), reduces reinvestment risk by not locking the whole sum at one point in the rate cycle, and lets you keep rolling into longer-tenure rates. It helps avoid premature-withdrawal penalties by providing planned access points.
Related guides
Related terms
- Fixed Deposit (FD) — A deposit that locks a sum with a bank for a fixed term at a pre-agreed interest rate.
- Premature Withdrawal — Closing or partly withdrawing a fixed deposit before maturity; the bank recalculates interest for the period held and deducts a penalty. Tax-saving FDs are generally locked in.
- FD Interest Frequency — How often an FD pays interest — monthly/quarterly/annual payout (non-cumulative) for income, or cumulative (compounded, paid at maturity) for the highest maturity value; the rate is usually the same, the difference is reinvestment.
Definitions are general and educational — not advice. Verify current rates, limits and thresholds with the provider or the RBI/SEBI before acting. See our editorial policy.