At Monday’s Treasury auction, a six-month bill sold at a level that works out to an investment rate of 3.728 percent. The average 12-month certificate of deposit at an American bank, measured across every insured institution in the country, pays 1.53 percent. Same government-backed safety, roughly the same commitment of time, and one option pays more than twice as much as the other.
That gap is the reason “T-bills” have gone from a Wall Street cash-management tool to a regular topic at kitchen tables. But the comparison is not as lopsided as the averages make it look, and each option has quirks worth understanding before you move your emergency fund. Here is how the two stack up in early May 2026, with every number tied to its source.
What a Treasury bill actually is
A Treasury bill is a short-term IOU from the federal government, sold in terms of one year or less. You buy it for less than its face value and receive the full face value at maturity; the difference is your interest. Bills are sold in $100 increments, and the government explains the mechanics on TreasuryDirect, the same site where individuals can buy them directly without a broker or a fee.
New bills are auctioned constantly. Four-week and eight-week bills go off every Thursday, 13-week and 26-week bills every Monday, and 52-week bills every four weeks, per the Treasury’s standing auction calendar. Individuals place what is called a noncompetitive bid, which simply means you agree to accept the rate the auction produces. You never have to guess a price.
What this week’s auctions paid
The numbers below are from the Treasury’s official auction results, quoted as the investment rate, the figure most comparable to a bank’s APY:
- 13-week bill (auctioned May 4): 3.694 percent
- 26-week bill (auctioned May 4): 3.728 percent
- 52-week bill (auctioned April 14, the most recent): 3.710 percent
- 4-week bill (auctioned May 7): 3.670 percent
Notice how flat that list is. Whether you lend the government money for one month or one year, you earn within a few hundredths of a point of the same rate. That is unusual by historical standards, and it means there is currently little reward for locking cash up longer at auction.
What banks are paying
The FDIC publishes a monthly survey of what every insured bank and credit union actually pays, weighted by deposits. The April 20, 2026 edition shows a national average of 0.38 percent on savings accounts, 1.44 percent on 6-month CDs, and 1.53 percent on 12-month CDs.
Those averages deserve one large caveat: they are dragged down by the biggest branch banks, which pay very little because they can. Online banks and some credit unions routinely offer CDs well above the national average, and at times competitive with bill yields. So the honest comparison is not “T-bills versus CDs.” It is “T-bills versus the best CD you are actually willing to open.” If your money is sitting in an average savings account at 0.38 percent, either move wins by a mile.
The tax break bills carry
Here is the advantage that does not show up in the posted rates: interest on Treasury bills is exempt from state and local income tax, while CD interest is fully taxable at every level. TreasuryDirect notes this treatment on its Treasury bills page. If you live in a state with an income tax, a bill’s after-tax yield beats a CD paying the same sticker rate, and the edge grows with your state’s tax rate. In a no-income-tax state such as Florida or Texas, this advantage disappears and the comparison is purely about the rates themselves.
Safety and getting your money out early
Both options are about as safe as American finance offers. CDs are covered by FDIC insurance up to $250,000 per depositor, per bank, per ownership category. Treasury bills are direct obligations of the U.S. government, so there is no insurance limit at all, which matters to anyone parking a large sum, such as proceeds from a home sale.
The bigger practical difference is what happens if you need the money early. Break a CD and the bank charges an early-withdrawal penalty, often several months of interest, set by the bank’s own terms. A Treasury bill has no penalty, but you cannot simply cash it in either. You would sell it on the market through a broker, at whatever price it fetches that day, and bills held at TreasuryDirect must first be transferred to a broker to sell. For short terms of a month or three months, the simplest plan is to pick a maturity you can actually wait out.
Which one fits you
A reasonable rule of thumb for a saver in 2026: if your state taxes income and you are comfortable setting up a TreasuryDirect account, short bills are paying more than most banks after tax, with no cap on the amount protected. If you value one familiar institution, automatic renewal, and a guaranteed rate for a term of a year or more, a top-paying CD is the simpler tool, and the FDIC’s monthly survey is a useful reality check on whether your bank’s offer is generous or merely average.
Either way, the worst-paying option is the one most Americans are actually using: an ordinary savings account at a large bank. In a year when the government itself will pay you about 3.7 percent for a 26-week loan, leaving cash at 0.38 percent is a choice, and an expensive one.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
Leave a Reply