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A Quick Guide to CD Barbells

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What we’ll cover:

  • CDs can be a great way to boost savings
  • A CD barbell strategy can help you earn a higher interest rate while providing flexibility when you need to access your funds
  • The flexibility can be helpful to savers with clear short-term and long-term savings goals

You may have heard of a CD ladder as a savings strategy. But what about CD barbells? Similar to a CD ladder strategy, a CD barbell involves splitting a pool of money and putting funds into short-term and long-term CDs. 

The goal here is to earn a higher average yield than you would have if you had you simply put that money into a traditional savings account or short-term CDs. At the same time, the barbell strategy offers flexibility for you to access a portion of your savings once the short-term CDs are up (or “mature”). 

Don’t worry, we’ll break this down for you.

Remind me again, what’s a CD?

“CD” stands for certificate of deposit. It is a type of savings product offered by banks, credit unions and some brokerage firms. When you open a CD, you agree to deposit a specific sum of money and leave it untouched for a certain amount of time. 

In exchange for this, your bank or financial institution promises to pay you interest, typically expressed as an annual percentage yield (APY), on that balance, until the CD matures. Typically, the interest rate on a CD is higher than the rate you’d get from a traditional savings account. 

If you were to withdraw the deposit before your CD reaches maturity, you usually would have to pay a penalty for the early withdrawal. That said, there are No-Penalty CDs out there that give you a little more flexibility when it comes to withdrawing your money before maturity.  See how your money could grow with our CD Calculator and No-Penalty CD Calculator.

CDs can come with a variety of terms and interest rates (fixed vs. variable). To keep things simple for the purposes of this article, we’ll be referring to traditional CDs, which come with a fixed interest rate. 

The benefits of a barbell strategy

If you have some extra cash sitting around or languishing in a low-interest savings account, you might want to consider deploying a CD barbell strategy. This strategy can help you earn a higher interest rate (on average) over time, while still giving you some flexibility to access your savings in the near term.

With a barbell strategy, you put half of your money into short-term CDs and the other half in long-term CDs. The short-term CDs make up one end of your barbell, and the long-term CDs form the other end. Together, the short-end and long-end of your barbell is designed to help you achieve a higher average yield over time than a traditional savings account.

Here’s a basic example. Say you’re looking to deposit $10,000 in CDs. Using a barbell strategy, you would put $5,000 into a short-term CD and $5,000 into a long-term CD with the following terms and rates:

  • Short-term: 6-month CD with 1.5% APY* 
  • Long-term: 5-year CD with 2.5% APY*

At the end of the five years, you will have earned an overall average yield of 2.0% (1.5%+2.5% / 2).  

Here are two benefits of this barbell strategy. The short-term CD gives you some flexibility if you need to access your savings in six months. But in the interim, you would usually earn a higher interest rate than you would have if you had simply put that money in a traditional savings account. A traditional savings account typically only offers an average of 0.09% APY. 

At the same time, the long-term CD in your barbell would allow you to take advantage of the higher rate of 2.5% APY. CDs with longer terms usually come with higher rates. 

Now let’s say that instead of using a CD barbell strategy, you decided to dump your entire $10,000 in to a 5-year CD (2.5% APY). While you can earn more in interest at the end of five years, your entire $10,000 is locked up during those five years. And unless you’re willing to pay a penalty, there’s little flexibility to access that cash if you need it before the CD matures in five years.

Here’s a breakdown of the example to give you a better picture:

   Traditional Savings Account

CD Barbell



(original deposit)



(split between short and long-term CDs)






1.5% for 6-month CD

2.5% for 5-year CD


Total interest earned

(after 5 years)




Ending balance




Access to funds


After 6-month CD matures

After 5-year CD matures

*Annual percentage yield (APY): Stated APYs are for illustrative purposes only and do not necessarily reflect APYs that are currently available.

The bottom line

Opening a CD account can be a great way to boost your savings, as they typically earn higher interest rates than a traditional savings account. Depending on your savings goal and the timing of those goals (time horizon), a CD barbell strategy can help increase your interest earnings and at the same time, give you a little more flexibility to access your savings when you need to. Savers with clear short-term and long-term savings goals could really take advantage of this flexibility.

But remember: Because a portion of your money will be locked up for at least a period of time, make sure to think about how much of your savings you can really afford to commit before opening a CD account. Happy savings!

See how much interest you could earn with a Marcus high-yield CD.

This article is for informational purposes only and is not a substitute for individualized professional advice. Individuals should consult their own tax advisor for matters specific to their own taxes and nothing communicated to you herein should be considered tax advice. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of Goldman Sachs Bank USA, Goldman Sachs Group, Inc. or any of their affiliates, subsidiaries or division. Goldman Sachs Bank USA does not provide any financial, economic, legal, accounting, tax or other recommendation in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.  Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA or any its affiliates. Neither Goldman Sachs Bank USA nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.