New CD Laddering Tool Available

Investment management company T. Rowe Price(TROW Quote - Cramer on TROW - Stock Picks) is offering a CD-laddering tool for consumers who are flocking to "safe" investment products until market volatility subsides.

CD laddering is a strategy for investors who want to maximize returns on their cash without tying it all up for a long period of time. Instead of placing all the funds in a five-year CD with high interest rates, or a three-month CD with low interest rates, the consumer will put portions of her total sum into CDs with various terms and rates. This allows her to hedge for better or worse rates down the road and have the short-term funds available relatively soon if she's in a bind.

T. Rowe Price's savings bank division rolled out a new product on Tuesday called the "Smart Ladder" CD, which automatically divides cash up into equal portions and places them into five CDs with one-, two-, three-, four- and five-year terms. In a twist from the traditional laddering method, however, when each CD matures, it is then rolled over into a five-year term, rather than the same term.

The minimum deposit required is $25,000, though customers receive higher rates at the $50,000 "mini-jumbo" level, and again at the $100,000 "jumbo" level. Customers can receive payments or allow the interest to remain in the account for a compounding effect. Interest rates vary from 2.47% to 3.62%, depending on the balance and the term.

Doug Thomas, executive vice president of T. Rowe Price Savings Bank, called the product a "hassle-free" way for consumers to take advantage of the laddering strategy without having to monitor each CD account individually.

Consumers can compare rates on the "Smart Ladder" CD with rates for other products in their local area by entering a ZIP code at BankingMyWay.com.