Treasury's latest auction of short-term bills drew strong demand from investors, and the yields on offer were high enough to make plenty of savers do a double take.
For anyone with cash sitting in a regular bank account earning next to nothing, the numbers are worth a closer look.
This isn't a stock tip or a hot new app — it's the federal government borrowing money, and it's paying a decent rate to do it.
When you buy a Treasury bill, you're lending money to the U.S. government for a short stretch — commonly four weeks, eight weeks, 13 weeks, or 26 weeks.
You buy it at a discount and get the full face value back when it matures.
The gap between what you pay and what you get back is your profit.
Because the government backs these, they're considered about as safe as it gets in the world of investing.
The latest auction results showed short-term yields hovering in a range that beats what most big banks pay on savings.
A 13-week bill, for example, has recently been landing near or above 5% on an annualized basis.
Compare that to the national average savings account rate, which has been stuck well under 1% at many large banks.
That gap is real money — on $10,000, the difference can add up to hundreds of dollars over a year.
Mostly because it sounds complicated, and for a long time it was.
You used to need a brokerage account and some patience with TreasuryDirect, the government's clunky but functional website.
But now you can also buy bills through most major brokerages, and some even let you do it in a few taps on your phone.
A growing number of money market funds and short-term Treasury ETFs offer a similar idea without the auction process.
A few things to keep in mind before you jump in.
Treasury bills are short-term, so when they mature you have to decide what to do next — you don't lock in a rate forever.
If the Federal Reserve cuts interest rates, yields on new bills will likely drift lower.
Also, the interest you earn is subject to federal income tax, though it's exempt from state and local taxes, which is a nice perk if you live in a high-tax state.
The bigger picture: this is one of those rare moments when doing something boring with your cash actually pays.
You don't need to be wealthy to participate.
You can start with as little as $100 through TreasuryDirect.
The catch is that you have to actually move the money — leaving it in a low-yield checking account is the equivalent of volunteering to earn less.
If you've been meaning to shore up your emergency fund or park cash you'll need in a few months, this is a reasonable place to look.
Match the maturity to when you'll actually need the money back, and read the fine print on any fund or brokerage product before you buy.
The takeaway is simple: for once, the safe option and the smart option are the same option.
That doesn't happen often, and it won't last forever.
Final Thoughts
If you've got idle cash, a short-term Treasury bill is worth at least a few minutes of your attention before rates shift again.