High-Yield Savings vs. CDs vs. Treasury Bills

Three places to park cash safely, and what each one actually pays on $20,000.

Last updated: October 12, 2026. The FDIC national rates (figures as of September 21, 2026), the FDIC deposit insurance page and the TreasuryDirect Treasury bills page were all read on that date. Interest figures were computed with this site's savings code.

The three options in plain terms

Savings and money market accounts are bank deposits whose rate can change at any time. You can usually add or withdraw money freely. Certificates of deposit (CDs) lock your money for a fixed term at a fixed rate; taking it out early normally costs a penalty set by the bank. Treasury bills are U.S. government securities. TreasuryDirect sells bills for terms from four weeks to 52 weeks (specifically 4, 6, 8, 13, 17, 26 and 52 weeks), in electronic form, at a discount or at par. You receive face value when the bill matures, and the interest is the difference between what you paid and that face value.

What the national averages pay on $20,000

The FDIC's national deposit rates published for September 21, 2026 were 0.37% for savings, 0.63% for money market accounts, 1.73% for 12-month CDs and 1.38% for 60-month CDs. These are national averages, and the best online banks routinely pay more, so treat them as a floor and not as what you can earn if you shop. Using these rates on $20,000, with interest on accounts credited monthly and on CDs once a year, and assuming the rate stays the same:

The gap is large in percentage terms: a 12-month CD at the national average earns about 4.7 times what a savings account does. In dollars it is $272 more per year on $20,000. The 60-month CD pays less than the 12-month CD in this snapshot, which shows why a long lock-up is not automatically rewarded: the national 12-month rate was higher than the 36-, 48- and 60-month rates on the FDIC page.

A ladder splits the difference

A CD ladder spreads the money over several maturities so something comes due every year. Putting $4,000 into each of five CDs at the 1-, 2-, 3-, 4- and 5-year national rates (1.73%, 1.61%, 1.36%, 1.28% and 1.38%) produces maturity values of $4,069.20, $4,129.84, $4,165.43, $4,208.77 and $4,283.72, for $856.96 of total interest and an average rate of 1.47%. The point is liquidity: one rung matures each year, so you can spend it or reinvest it at then-current rates. The CD ladder calculator builds one for your rates.

Safety: two different kinds

Bank and credit union deposits are insured. The FDIC states deposits are insured to at least $250,000 at each FDIC-insured bank, covering checking, savings, money market deposit accounts and CDs, so money at a different insured bank is insured separately. Treasury bills are not bank deposits; they are securities issued by the U.S. government. Either way, check which protection applies to the account you are opening, and keep balances within the insured limit at each bank.

The tax difference

TreasuryDirect states that bill interest is subject to federal tax but not to state or local taxes. Bank interest is taxable at both levels. A hypothetical makes the gap visible: suppose a bank account and a bill both pay 3.00% and your state tax rate is 5%. The bank interest after state tax is 3.00% × (1 − 0.05) = 2.85%, while the bill's is 3.00%. On $10,000 that is $285 versus $300 before federal tax. The 3% and 5% are made-up numbers; check current bill yields and your state's rules. In a state with no income tax the advantage disappears.

Which to use for what

• Emergency money you may need tomorrow: an insured savings or money market account. See the emergency fund guide.
• Money you will not need for a known period: a CD or a bill with a matching term.
• A mix: a ladder, or a savings account plus a few bills.

Remember inflation too: a rate below the inflation rate shrinks your buying power. The inflation guide puts numbers on it.

Compare your own rates in the savings calculator. These guides are for education and are not financial, tax, legal or insurance advice. Nothing you type into the calculators is sent anywhere.