The latest government auction of short-term Treasury bills drew strong demand, and the payout landed well above what most brick-and-mortar banks are offering on savings right now.
For anyone sitting on idle cash, that gap is worth a closer look.
Treasury bills are short-term loans you make to the federal government, typically maturing in four weeks to a year.
You buy them at a discount and get the full face value back at maturity.
The difference is your return, and it's backed by the full faith and credit of the U.S. government.
At recent auctions, yields on bills in the three- to six-month range have hovered in a band that comfortably beats the national average savings account rate, which still sits near 0.4% at many large banks.
That spread is the whole story: same dollars, very different payout.
You need a TreasuryDirect account, which is free but has a famously clunky interface, or a brokerage like Fidelity, Schwab, or Vanguard.
Through a brokerage, bills are often available in $1,000 increments, and some let you trade them on the secondary market.
If you lock money into a 26-week bill and an emergency pops up, you either sell early, possibly at a slight loss, or wait it out.
That's why many savers ladder bills: four-week, eight-week, thirteen-week, and so on, so something matures regularly.
Treasury interest is exempt from state and local income tax, though it's still subject to federal tax.
If you live in a high-tax state like California or New York, that exemption can quietly boost your effective return by a meaningful margin.
One more thing people miss: interest rates on bills move constantly.
A rate you saw last month isn't the rate you'll get today.
The Fed's next move, inflation readings, and even the debt ceiling debate can all nudge yields up or down between auctions.
If your savings is parked in a big-bank account earning next to nothing, the math is simple: a few minutes of setup could mean hundreds more dollars a year on the same balance.
Just keep an emergency fund in something you can reach instantly, and put only the money you won't need for a few months into bills.
Our take: Treasury bills aren't glamorous, and nobody's going to brag about them at a cookout.
But for cash you'd otherwise leave languishing in a low-yield account, they're one of the more straightforward ways to get paid a little more for doing nothing.
Final Thoughts
Just check the current yield before you commit, because it won't wait for you.