The latest Treasury bill auction cleared on Thursday, and the numbers are worth a second look for anyone with cash sitting in a savings account earning next to nothing.
Short-term government debt continues to offer yields that beat the national average on standard deposit accounts by a wide margin.
At this week's auction, the three-month bill came in at an annualized rate above 4%, while the six-month version landed in a similar range.
That means parking $10,000 for half a year could return roughly $200 or more, depending on the final discount rate.
Compare that to a typical big-bank savings account paying 0.4%, which would earn about $20 over the same stretch.
Treasury bills work differently than a savings account.
You buy them at a discount and get the full face value back at maturity — usually four, eight, 13, 17, 26, or 52 weeks.
The difference between what you pay and what you get back is your return.
No monthly fees, no minimum balance games, and the interest is exempt from state and local income taxes, though it is still taxable at the federal level.
You don't need a Wall Street broker to participate.
TreasuryDirect, the government's own portal, lets you buy bills directly with no commission.
You can also purchase them through most major brokerage accounts, though some charge a markup.
The minimum on TreasuryDirect is $100, which makes it accessible for people who aren't sitting on five-figure savings.
One catch: your money is locked until the bill matures.
Unlike a savings account, you can't pull cash out early without selling on the secondary market, and prices there can fluctuate.
Many financial planners suggest keeping three to six months of expenses in something liquid first, then using bills for money you won't need right away.
Rates on these auctions move with the Fed's policy decisions, so they won't stay at these levels forever.
If the central bank cuts rates later this year, new auctions will likely pay less.
That has pushed some savers to lock in longer maturities, like the 52-week bill, to stretch today's yields further into the future.
Some banks promote "Treasury-linked" products that carry fees and don't actually hold government debt.
Others push CDs with early withdrawal penalties that wipe out the advantage.
Read the fine print and compare the actual yield, not the marketing language.
For anyone tired of watching inflation eat into a low-yield account, the auction calendar is public and free to check.
New bills are sold every week, and you can set up automatic reinvestment so the money rolls over without you lifting a finger.
If you've got cash you won't touch for a few months, a Treasury bill auction is one of the simplest ways to earn a decent return with essentially no credit risk.
Final Thoughts
Just keep your emergency fund separate, understand that the rate resets with each auction, and don't chase yields with money you might need next week.