The latest Treasury bill auction cleared with yields still hovering near 5% on short-term government debt, and a growing number of ordinary Americans are quietly parking cash there instead of in savings accounts.
If your bank is still paying you 0.5% or less, the gap is now wide enough to notice.
When you buy a Treasury bill, you're lending the government money for a set stretch of time — commonly 4, 8, 13, 17, or 26 weeks.
Instead, you buy the bill at a discount and get the full face value back at maturity.
A $1,000 bill might cost you around $975, and you collect the other $25 when it matures.
These are backed by the U.S. government, the minimum purchase is $100 through TreasuryDirect, and there's no state or local income tax on the interest.
For anyone sitting on an emergency fund that's earning almost nothing at a big bank, that tax break alone can be worth more than the headline rate suggests.
You buy them directly at TreasuryDirect.gov, which is free but looks like it was designed in 2003.
You can also buy them through most brokerage accounts, and some brokers let you trade them on the secondary market if you don't want to wait for an auction date.
Either way, you generally need to hold to maturity to get the full benefit — selling early means taking whatever the market offers that day.
TreasuryDirect does not work like a bank account.
There's no debit card, no ATM, and moving money back to your checking account can take a business day or two.
That makes T-bills a poor fit for money you might need this week, but a reasonable spot for cash you won't touch for a few months.
Keep one month of expenses in plain old checking so you never get stuck.
Ladder the rest in bills maturing at different dates so something is always coming due.
And if you're chasing the absolute highest yield, compare the after-tax return — a 5% Treasury and a 5.4% bank CD are not the same thing once state taxes enter the picture.
The rate at the last auction is not a promise for the next one.
If the Fed cuts rates later this year, the yields on new bills will likely drift down, and plenty of people who waited will wish they'd locked in sooner.
That's not a prediction, just how the math has played out in past cycles.
Some brokers charge nothing for Treasury auctions; others bury a commission.
And a handful of financial apps now offer "T-bill access" through a fund, which is fine but comes with an expense ratio and isn't the same as owning the bill directly.
My take: if you've got idle cash earning next to nothing, it's worth twenty minutes to open a TreasuryDirect account and see what the current auction yields look like.
Final Thoughts
Just don't move your rent money there — the point is to earn a little more on cash you weren't going to spend anyway.