Key takeaways
- CDs lock in a fixed rate for a set term, with penalties for early withdrawal.
- Treasury bills are backed by the U.S. government and exempt from state and local income tax.
- Money market funds are not FDIC-insured, but money market accounts at banks are.
If you have cash you don’t need right away, these options can earn more than a regular savings account while keeping risk low.
Certificates of deposit (CDs)
A CD pays a fixed rate for a set period, from a few months to five years or more.
- Pros: Locked-in rate, FDIC or NCUA insured.
- Cons: Penalty if you withdraw early, often several months of interest.
- Best for: Money with a known future use date.
CD ladder: Split your money across CDs with different terms, such as 6, 12, 18 and 24 months. As each matures, you get access to part of your money and can reinvest at current rates.
Treasury bills
T-bills are short-term U.S. government debt, with terms of 4 to 52 weeks. You buy them at a discount and receive the full face value at maturity.
- Pros: Backed by the U.S. government, exempt from state and local income tax, easy to buy through TreasuryDirect or a brokerage.
- Cons: Rates change with each auction; selling before maturity through a brokerage could mean a small gain or loss.
- Best for: People in high-tax states and anyone wanting the safest short-term option.
Money market accounts
These are bank or credit union deposit accounts, similar to savings accounts, sometimes with check-writing or a debit card.
- Pros: FDIC or NCUA insured, easy access.
- Cons: Some require higher minimum balances to earn the best rate.
Money market funds
These are mutual funds that invest in short-term debt, offered by brokerages.
- Pros: Yields often track short-term interest rates closely.
- Cons: Not FDIC-insured, though they’re considered low risk.
- Best for: Cash held in a brokerage account.
Quick comparison
| Option | Access | Rate | Insured? |
|---|---|---|---|
| High-yield savings | Anytime | Variable | FDIC/NCUA |
| CD | At maturity (penalty if early) | Fixed | FDIC/NCUA |
| Treasury bill | At maturity or sell | Fixed to maturity | Backed by U.S. government |
| Money market account | Anytime | Variable | FDIC/NCUA |
| Money market fund | 1–2 business days | Variable | Not insured |
Which is right for you?
Keep your emergency fund in a high-yield savings or money market account. Use CDs or T-bills for money with a set timeline. For inflation protection, consider I bonds and TIPS.
WalletJolly may earn a commission from links on this page. Rates, prices and rules mentioned are current as of Oct. 28, 2026 and can change. This article is general information, not financial, tax, insurance or legal advice.
