The Smartest Money Move to Make Right NOW

Financial Independence, Interest Rates, Saving

January 18, 2024

The interest you earn on bank accounts, short-term Treasuries, and money market mutual funds at brokerage firms is tied to an interest rate controlled by the Federal Reserve. When the Fed changes its Federal Funds rate, interest rates typically follow that path. And the Fed has told us that in 2024 it is likely that it will be reducing the Federal Funds rate. If and when that happens, the interest rates you may be currently enjoying in these short-term safe cash accounts will fall as well.


So I need you to listen up because the smartest money move you can make right now is to lock up today’s great rates, by putting some of your “cash” savings in certificates that have a one-year to two-year maturity.


With a certificate, the interest rate when you open the account will be the interest rate for the entire “term” of the certificate. There are certificates that mature in 6 months, in 12 months, in 18 months, and longer.


At Alliant Credit Union (, where anyone can apply for membership and open an account, the minimum deposit to open a  certificate is $1,000.  The current annual percentage rate on a 12-month certificate1 is 5.40% APY or 5.45 APY% for deposits of $75,000 or more. You also have the option of extending that 12-month certificate to 17 months.  


My advice, however, is to lock in the 18-23 month certificate at Alliant currently at 5.30% APY or 5.35% APY for $75,000, or more.  Again, the longer you can lock in today’s rate the happier you will be if, as expected, rates go down.  


I know some of you invest in Treasuries because the interest is exempt from state and local income tax. That’s a smart strategy, but I want you to understand that right now the rates on the Alliant certificates are one percentage point higher than short-term Treasury yields, so even after paying state income tax on the certificate interest, you will come out ahead.


Now, even though I know those are seriously great interest rates, you should always search online for “high-rate certificates”, but I can tell you Alliant’s certificate rates for those maturities are the best out there, especially for the 18-23 month maturity (I don’t get paid if you open an Alliant certificate.)  Don’t go for less than one year, however, no matter where you decide to open a certificate. 


As great as the certificate offers are today, I don’t want you putting all your emergency savings into a certificate. That’s because if you need the money during the year, you will pay a penalty for making an early withdrawal. It’s not typically a big penalty, but something you want to avoid: with a 12-month certificate, an early withdrawal can mean forfeiting a few months of interest. Not the end of the world, but something to plan around. My advice is to keep at least eight months of living expenses in a money market account and consider moving the rest to a certificate. 


A long-term certificate can also be a great move if you are nearing, or in retirement, or are someone who counts on the income of their investments to live on. The last thing you want is for your income to decrease as interest rates go up and down.  


Lock in those rates now! 


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