What about brokered CDs?

Same FDIC insurance as bank CDs, but trade like a security on a brokerage, you can sell early at market price instead of taking the early-withdrawal penalty. Often the right middle ground.

How do I build a T-bill ladder?

Buy equal amounts at 4-week, 8-week, 13-week and 26-week maturities. As each matures, buy another 26-week. You get a steady cash flow and average rate exposure.

Are T-bills risky if rates rise?

Short-term T-bills (≤6 months) move minimally in price. The longer the maturity, the more rate risk, same as any bond.

Comparison · Saving

CDs vs Treasury Bills: The Cash Yield Showdown

By Yinka Olayokun Published May 12, 2026 Reviewed May 12, 2026

Quick Answer

A CD locks in a fixed rate at a bank for a set term and is FDIC-insured. A T-bill is short-term U.S. government debt that's exempt from state and local tax. After tax, T-bills usually win for residents of high-tax states; CDs can edge ahead for retirees in no-income-tax states.

At a glance

Criterion	Certificate of Deposit (CD)	Treasury Bill	Winner
Quoted yield (2026 typical)	4.5–5.25% on 12-month CDs.	4.7–5.3% on 6-month T-bills.	Tie
State / local tax	Fully taxable.	Exempt from state and local income tax.	Treasury Bill
Default risk	FDIC-insured to $250k.	Backed by U.S. Treasury, the benchmark for risk-free.	Treasury Bill
Early withdrawal	Penalty of 3–12 months interest.	Sell on the secondary market at the current price.	Treasury Bill
Minimums	$500–$1,000 typical.	$100 minimum on TreasuryDirect; $1,000 in brokerage.	Tie
Reinvestment hassle	Bank rolls automatically (often at a worse rate).	Manual roll, or buy a ladder.	Certificate of Deposit (CD)

Why state tax often decides the question

T-bill interest is exempt from state and local income tax. For a saver in California (9.3% top rate) or New York City (~10.9% combined), that exemption is worth roughly half a percentage point of after-tax yield. A 4.8% T-bill can beat a 5.0% CD after tax.

For a saver in Texas, Florida, Tennessee or another state with no income tax, the exemption is worth nothing and the higher headline CD rate wins.

Liquidity is a real edge

A T-bill in a brokerage can be sold any business day at the current price, usually within a few cents of par for shorter maturities. A CD redeemed early forfeits months of interest. For an emergency reserve that you genuinely won't touch, the difference is academic. For 'maybe-emergency' cash, the T-bill's liquidity matters.

Best for…

High-tax-state saver (CA, NY, NJ)
Pick Treasury Bill
State-tax exemption pushes after-tax yield ahead of comparable CDs.
No-income-tax state saver
Pick Certificate of Deposit (CD)
Pick the higher headline rate; FDIC insurance is functionally identical to Treasury credit.
Retiree wanting set-and-forget
Pick Certificate of Deposit (CD)
Auto-renewing CD ladder is one decision; T-bill rolls require attention.
Anyone parking down-payment cash 6–18 months out
Pick Treasury Bill
Liquidity + Treasury safety + state-tax exemption.

Frequently Asked Questions

What about brokered CDs?: Same FDIC insurance as bank CDs, but trade like a security on a brokerage, you can sell early at market price instead of taking the early-withdrawal penalty. Often the right middle ground.
How do I build a T-bill ladder?: Buy equal amounts at 4-week, 8-week, 13-week and 26-week maturities. As each matures, buy another 26-week. You get a steady cash flow and average rate exposure.
Are T-bills risky if rates rise?: Short-term T-bills (≤6 months) move minimally in price. The longer the maturity, the more rate risk, same as any bond.

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