rewrite this title Treasury Bills vs. High-Yield Savings Accounts – NerdWallet

Treasury bills and high-yield savings accounts are both safe places to earn interest on cash that needs to remain accessible in the short-term. Liquidity needs may dictate which one you choose.

Potential interest rate: 4%+

Treasury bills, or T-bills, are government-backed investments with terms ranging from four weeks to one year. You can buy T-bills from a bank or brokerage, or invest directly through TreasuryDirect.gov.

On TreasuryDirect, you can link your bank account to the site and invest in your T-bill of choice — and have your money automatically reinvested when that T-bill matures, if desired.

Another relatively new option available is a Treasury account, which is offered at some brokerage firms and does the work of buying T-bills for you, holding them to maturity and then reinvesting the profits. (NerdWallet has a partnership with Atomic Treasury to offer a Treasury account. Public, an online broker NerdWallet reviews, also offers a Treasury account.)

The advantage of Treasury bills, aside from their low risk and the fact that they’re government-secured, is that the interest you earn is state and local tax-free. You must hold the T-bill to maturity to realize the full gain, so they’re an option for cash you don’t need immediately. You can sell T-bills early, but you might not get full value.

Many brokers also offer a Treasury exchange-traded fund (ETF) or index fund that lets you invest in a basket of different Treasury products.

Potential interest rate: 4%+

High-yield savings accounts offer higher interest than savings accounts at traditional banks. Many banks offering these rates are online, and if they’re FDIC-insured, they offer the same protections for your money as brick-and-mortar banks.

If you can get 4% or more (or close to it), you’ll handily beat the national average interest rate for savings accounts, which is 0.42%.

Like most savings accounts, HYSAs typically don’t offer access to funds with check-writing or debit cards, but cash can be transferred out as needed, so these accounts are considered liquid.