Neither CDs nor Treasury bills are always the better choice. Compare them over a similar maturity, using yields quoted on the same basis, then account for taxes and how you would get your money before maturity. A CD is a bank or credit-union deposit with access governed by its terms, usually including an early-withdrawal penalty. A Treasury bill is a short-term U.S. government security that pays face value at maturity; if you sell it sooner, the price depends on the market.
Start by matching the time you can leave the money invested
A 13-week Treasury bill is not a like-for-like comparison with a multi-year CD. Choose a CD and bill with maturity dates close to when you expect to need the money, and compare the return for that holding period. TreasuryDirect lists bill terms of 4, 6, 8, 13, 17, 26, and 52 weeks. Bills can be bought at auction in $100 increments, with a $100 minimum, according to TreasuryDirect product information checked October 3, 2026 (Treasury Bills).
If the date you need cash is known, choosing a maturity near that date can reduce the chance that you must exit early. For a CD, check the stated term and any renewal terms; for a bill, check its maturity date.
Compare yields on the same basis
CDs are commonly advertised with an annual percentage yield (APY). Treasury bill quotes may use either a bank-discount rate or a coupon-equivalent (also called bond-equivalent or investment-yield) rate. Do not compare a CD APY directly with a bill’s bank-discount quote as if they measured return identically.
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The Treasury’s Daily Treasury Rates page explains that its daily bill rates are secondary-market quotations on the most recently auctioned bills. The bank-discount rate is calculated using par value and a 360-day year; coupon equivalent uses purchase price and a 365- or 366-day year and is intended to help compare a discount bill with a nominal coupon security of similar maturity. Check the quote’s date, tenor, and convention before comparing it with an offer.
CD rates vary by institution, term, and offer, while Treasury yields vary with auctions and market conditions. FDIC national averages are useful context, not individual offers. As of March 16, 2026, the FDIC reported these historical averages and corresponding Treasury yields in its rate-cap table context:
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| Approximate tenor | FDIC national average CD rate | Treasury yield shown by FDIC |
|---|---|---|
| 3 months | 1.28% | 3.67% |
| 6 months | 1.47% | 3.60% |
| 12 months | 1.52% | 3.48% |
| 24 months | 1.49% | 3.38% |
These are March 2026 aggregates, not current bank offers or October 2026 yields. The FDIC says its CD averages are based on $10,000 and $100,000 product tiers and tenors commonly offered by banks included in its data. See FDIC National Rates and Rate Caps – March 2026. Use same-day individual CD offers and Treasury yields for a current decision.
Estimate what you keep after taxes
Treasury bill interest is subject to federal income tax but exempt from state and local income taxes. The IRS explains that bills are generally issued at a discount and that the difference between purchase price and face value is generally reported as interest when the bill is paid at maturity. See IRS Publication 17 (2025), U.S. Treasury Bills, Notes, and Bonds.
CD interest is generally taxable interest. The size of any T-bill advantage depends on your state and local tax rates and individual tax circumstances; bills are not tax-free. For CD-specific reporting details, use the account’s tax statement and IRS guidance or consult a qualified tax professional.
For a practical comparison, estimate each product’s interest over the same period, then account for federal tax and, where applicable, state and local tax. The relevant number is your estimated after-tax return, not just the headline rate.
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Understand what happens if you need the money early
CD: withdrawal under the account contract
The Consumer Financial Protection Bureau describes a CD as a savings account offered by banks and credit unions and notes: “Withdrawing money early means paying a penalty fee to the bank.” The penalty depends on the institution and product, so read the specific terms before opening the account. Compare the term, rate, and penalty, as the CFPB recommends (What is a certificate of deposit (CD)?). Also check whether the CD is callable; a callable CD can be redeemed early by the institution under its terms (FDIC: Shopping for a Certificate of Deposit?).
Treasury bill: sale at the market price
TreasuryDirect says bills may be held to maturity or sold before maturity. At maturity, the bill pays face value. An early sale is a market transaction, so proceeds may be more or less than face value depending on the price available then; it is not a guaranteed par withdrawal. Check the current procedures and timing of the TreasuryDirect account or brokerage you would use before relying on a sale to meet a cash deadline (Treasury Bills).
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Know which protection applies
Eligible CDs at FDIC-insured banks are deposit accounts covered up to $250,000 per depositor, per insured bank, per ownership category. The limit applies across eligible deposits in the same category at that bank, so include other deposits and accrued interest when assessing coverage. Credit-union CDs may be covered by the National Credit Union Administration (NCUA), not the FDIC. Confirm the institution’s insurance status and account ownership category.
Treasury bills are not FDIC-insured. The FDIC says Treasury securities are backed by the full faith and credit of the U.S. government; that is a different form of backing from deposit insurance. See FDIC Deposit Insurance at a Glance.
Quick Recap
Use this checklist to choose
- Horizon: Do the CD term and bill maturity line up with when you expect to use the cash?
- Yield: Are you comparing a dated CD APY with a Treasury yield for a similar tenor, and is the bill quote coupon-equivalent or bank-discount?
- Taxes: Does the T-bill’s state and local tax exemption change your estimated after-tax return?
- Early access: Can you accept the CD’s stated penalty, or the possibility that a bill sale price differs from face value?
- Protection and limits: Is the CD within applicable FDIC or NCUA coverage, or do you prefer direct exposure to a U.S. Treasury security?
- Practicalities: Does the offer meet your minimum, and can your chosen account or provider support the purchase, maturity, or sale you need?
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