Suze Orman: The One Easy Money Move Everyone Should Make Right Now
If you’ve been wondering whether your savings account is still the best place to keep your cash, you’re not alone. The answer could mean earning hundreds of dollars more in interest each year, depending on how much you’ve saved.
Back when CD rates topped 5% in 2024, personal finance expert Suze Orman urged savers to consider moving some of their money into a certificate of deposit (CD), a type of savings account that lets you lock in a fixed interest rate for a set period in exchange for agreeing not to withdraw the money until the term ends. At the time, those unusually high rates made CDs an attractive option.
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Today, interest rates have come down, raising an important question: Does Orman’s advice still make sense today?
How Orman's CD Advice Holds Up Now
In a January 2024 post on SuzeOrman.com, Orman explained why she believed CDs were the smartest place for some cash savings while rates remained elevated.
“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,” she wrote.
When Orman shared that advice, CDs paid more than 5% annual percentage yield (APY), which is the total amount of interest you can earn on your money in one year, were widely available. While those eye-catching returns have largely disappeared, the broader principle behind her advice remains relevant: Make sure your cash is earning a competitive return instead of sitting in a low-paying account.
What's the Benefits of CDs Today?
Unlike a traditional savings account, whose interest rate can change at any time, a CD locks in the same rate until it matures. For Orman, the goal wasn't simply to earn more interest. It was to secure a strong return before the Federal Reserve, the U.S. central bank that helps influence interest rates throughout the economy, began lowering interest rates.
Her prediction proved accurate. The Federal Reserve later lowered its benchmark interest rate, and CD yields gradually followed.
As of July 28, many of the highest-paying CDs offer between about 4.1% and 4.5% APY, depending on the term and financial institution. That’s lower than the 5%-plus rates available when Orman wrote her post, but it’s still considerably more than many traditional savings accounts pay.
According to the Federal Deposit Insurance Corporation (FDIC), the national average annual percentage yield for a 12-month CD is about 1.68%, highlighting how much rates can vary from one financial institution to another.
For someone with $25,000 in savings, choosing a competitive CD instead of an account paying close to the national average could mean earning hundreds of dollars more in interest over the course of a year.
The Bottom Line: Orman's Advice Still Holds Up Despite Lower Yields
That’s why Orman’s advice still holds up. The opportunity is no longer about locking in rare 5% yields before they disappeared. Today, it’s about deciding whether a fixed return is more valuable than having immediate access to your money.
Orman also emphasized that a CD is not, necessarily, the right place for every dollar.
“My advice is to keep at least eight months of living expenses in a money market account, a type of savings account that typically pays higher interest while still letting you access your money when you need it, and consider moving the rest to a certificate," according to the longtime expert.
That guidance is just as relevant today. Emergency savings should stay easily accessible because withdrawing money from a CD before it matures usually comes with a penalty.
For savings you won't need for a year or two, however, a competitive CD can still be one of the simplest ways to earn more on your cash without taking on additional investment risk.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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