Wealthy PotCDs vs Treasury Bills: Which Pays More?
Certificates of deposit and Treasury bills do the same basic job: park cash for a set period at a fixed, known return. They are close enough that savers often pick one out of habit. But they differ on taxes, on how you get your money out early, and on who is standing behind the guarantee, and right now those differences are worth real money.
The Short Answer
- On raw yield right now, T-bills have a slight edge. The 52-week bill came in at a 4.37% coupon-equivalent rate on September 17, 2026, versus about 4.25% for the best 1-year CDs we track.
- T-bills also skip state and local income tax. CD interest does not. In a high-tax state that gap matters more than the headline rate.
- CDs are simpler and lock your rate for longer. If you want a fixed rate for three or five years, CDs go there and bills do not.
- Both are about as safe as cash gets, but in different ways: FDIC insurance up to $250,000 versus the full faith and credit of the U.S. government with no dollar cap.
- Watch the "average" CD trap. The FDIC national average 1-year CD was just 1.71% in August 2026. Nationally advertised online CDs pay roughly 2.5× that. Where you shop matters more than which product you pick.
Rates Today: How They Compare
Treasury bill rates below are coupon-equivalent yields published by the U.S. Treasury for September 17, 2026. CD rates are the strongest nationally available offers from the banks we track, verified against each bank's own rate page in mid-September 2026.
| Term | Treasury bill | Best CD we track |
|---|---|---|
| 4 weeks | 3.89% | — |
| 8 weeks | 4.00% | — |
| 13 weeks (~3 mo) | 4.16% | — |
| 26 weeks (~6 mo) | 4.24% | 4.10% (Synchrony) |
| 52 weeks (~1 yr) | 4.37% | 4.25% (Barclays) |
| 3 years | not offered | 4.35% (Marcus) |
| 5 years | not offered | 4.35% (Marcus, Synchrony) |
Two things stand out. First, bills currently pay a little more than CDs at every term where both compete. Second, bills stop at 52 weeks. Treasury bills are issued in terms of 4, 6, 8, 13, 17, 26, and 52 weeks, so if you want to lock a rate for several years, a CD (or a Treasury note) is the tool, not a bill.
Rates on both move constantly. Treat the table as a snapshot, not a promise, and confirm live rates before you commit money.
The Tax Difference Most People Miss
This is the part that usually decides it, and it rarely shows up in a rate comparison.
Treasury bill interest is exempt from state and local income tax. You still owe federal income tax on it, but your state gets nothing. CD interest is fully taxable at both the federal and state level.
Here is what that does to a real comparison. The figures below are a hypothetical illustration, not a projection of your actual return:
| $10,000 for one year | 52-week T-bill @ 4.37% | 1-year CD @ 4.25% |
|---|---|---|
| Interest earned | $437.00 | $425.00 |
| State tax at 5% | $0.00 | −$21.25 |
| After state tax | $437.00 | $403.75 |
A 0.12-point rate edge becomes a $33 gap on $10,000 once state tax is counted. The higher your state income tax rate, the wider it gets, and in a state like California or New York the effect is considerably larger. If you live somewhere with no state income tax, this advantage disappears entirely and you should compare the headline rates straight up.
Which Is Safer?
Both sit at the very low end of the risk scale, but the guarantees are structured differently.
CDs are covered by FDIC deposit insurance, which protects your deposits to at least $250,000 per depositor, per insured bank, per ownership category. Below that limit, a bank failure does not cost you your money. Above it, at a single bank, the excess is not insured.
Treasury bills are backed by the full faith and credit of the U.S. government, and there is no dollar cap on that backing. For a saver moving a large sum, say $400,000, a T-bill covers the whole amount under one guarantee, while the same money in CDs would need to be split across banks or ownership categories to stay fully insured.
Neither carries meaningful credit risk for ordinary savers. The practical distinction is the insurance ceiling, and it only bites at larger balances.
Getting Your Money Out Early
Both products assume you will hold to maturity. Breaking that assumption works differently in each.
A CD charges a defined penalty. The bank takes back a set amount of interest, commonly 90 days' worth on shorter terms and 180 days or more on longer ones. The cost is knowable in advance because it is written into the account agreement, and it is capped: you generally lose interest, not principal. Some banks also sell no-penalty CDs, which trade a slightly lower rate for the right to cash out early without a charge.
A T-bill has no penalty, but it does have market risk. There is no early-withdrawal fee because you are not breaking a contract with a bank; instead you sell the bill to another investor on the secondary market. What you get depends on interest rates that day. If rates have risen since you bought, your bill is worth less than you paid, and unlike a CD penalty, that loss can eat into principal.
So: a CD's exit cost is predictable and bounded, a T-bill's is not. If there is a real chance you will need the cash early, that asymmetry favors a CD, or better, a no-penalty CD or a high-yield savings account.
Who Each One Fits
Treasury bills fit if: you live in a state with meaningful income tax, you are holding more than $250,000 in one place, you want the highest current yield on cash you will not touch for a year or less, or you want to start small, since bills are sold in $100 increments with a $100 minimum.
CDs fit if: you want a rate locked for longer than a year, you value a predictable, capped cost for breaking early, you would rather open an account at a bank than use TreasuryDirect or a brokerage, or you live in a state with no income tax, which erases the bills' tax edge.
Neither fits if the money is your emergency fund. Cash you might need on short notice belongs somewhere liquid. Compare options in our high-yield savings guide, and note that the FDIC national average savings rate was just 0.38% in August 2026, so leaving that cash at a typical brick-and-mortar bank is its own quiet cost.
A CD ladder is worth knowing about here too. Staggering maturities gets you longer-term rates while keeping part of your money coming due regularly, and the same technique works with T-bills.
FAQ
Do Treasury bills pay more than CDs?
Right now, slightly. On September 17, 2026, the 52-week T-bill yielded 4.37% coupon-equivalent versus about 4.25% for the best 1-year CDs we track. The gap is small on rate alone, but T-bill interest is exempt from state and local income tax, which widens the real advantage for savers in taxed states. This relationship shifts as rates move, so check both before you buy.
Are Treasury bills safer than CDs?
Both are extremely safe. CDs are FDIC-insured to at least $250,000 per depositor, per bank, per ownership category. Treasury bills are backed by the full faith and credit of the U.S. government with no dollar limit. Below $250,000 at one bank the difference is academic; above it, T-bills cover the full amount under a single guarantee.
Do you pay state taxes on Treasury bills?
No. Treasury bill interest is exempt from state and local income tax. You still owe federal income tax on it. CD interest, by contrast, is taxable at both the federal and state level, which is why a CD needs a higher headline rate to match a T-bill after tax.
What is the minimum to buy a Treasury bill?
$100, purchased in $100 increments, through TreasuryDirect. Many brokerages also sell bills, sometimes with their own minimums. CD minimums vary by bank, from $0 at banks like Barclays and Synchrony to $500 or $1,000 elsewhere.
Can I cash out a Treasury bill early?
Yes, by selling it on the secondary market, and there is no early-withdrawal penalty. But the price you get depends on interest rates that day, so you can receive less than you paid if rates have risen. A CD instead charges a defined penalty, often 90 to 180 days of interest, which is more predictable and generally does not touch your principal.
Related reading: How to build a CD ladder · Treasury bonds vs bills vs notes · High-yield savings vs money market · Are CDs safe during inflation?
This article is for general education only and is not investment or tax advice. Treasury and CD rates change daily, and the figures here are a dated snapshot from the sources named above. Tax treatment depends on your own situation and state of residence. Confirm current rates and consult a qualified tax or financial professional before investing.