Savings
CD vs High-Yield Savings vs Treasuries: Which Wins?
For most savers in a state with an income tax, short-term Treasuries pay the most after tax, CDs win when you want to lock a rate for years, and a high-yield savings account wins for money you might need at any moment. As of mid-October 2026, top high-yield savings accounts pay about 4.25% APY, the best 1-year CDs about 4.50%, and 1-year Treasuries 4.46%. Because Treasury interest is exempt from state income tax, a 4.46% Treasury yield is worth about the same as a 4.77% bank yield to someone paying 24% federal and 5% state tax.
Rates change daily. The figures below are dated so you can compare them with today's numbers before you move money.
Today's Rates at a Glance
Top widely available bank rates are from Bankrate's CD rate and high-yield savings surveys as of October 19, 2026. Treasury yields are from the US Treasury daily par yield curve for October 16, 2026. National averages are from the FDIC as of October 19, 2026.
| Term | Top bank APY | National average (FDIC) | Treasury yield |
|---|---|---|---|
| Savings (no term) | 4.20% to 4.27% | 0.38% | n/a |
| 6 months | 4.15% | 1.39% | 4.34% |
| 1 year | 4.50% | 1.76% | 4.46% |
| 3 years | 4.85% | 1.39% | 4.82% |
| 5 years | 4.50% | 1.41% | 4.89% |
Two things stand out. First, the gap between the best accounts and the average account is huge: an average savings account pays 0.38%, more than four points less than the top online banks. Second, at 5 years the Treasury pays more than the top CD even before taxes.
A note on comparing: bank rates are quoted as APY, which includes compounding, while Treasury yields are quoted on a bond-equivalent basis. The two are close enough for side-by-side decisions, but not identical.
After-Tax Yields: Where Treasuries Pull Ahead
Interest from savings accounts and CDs is taxed by the federal government and your state. Interest from Treasury bills, notes and bonds is taxed federally but is exempt from state and local income tax (TreasuryDirect). The higher your state tax rate, the more that matters.
Assumptions: 24% federal bracket, 5% state income tax, standard deduction (so no federal benefit from state tax paid).
| Option | Yield | After-tax yield | Bank yield needed to match |
|---|---|---|---|
| High-yield savings | 4.25% | 3.02% | |
| 6-month CD | 4.15% | 2.95% | |
| 6-month Treasury bill | 4.34% | 3.30% | 4.65% |
| 1-year CD | 4.50% | 3.20% | |
| 1-year Treasury bill | 4.46% | 3.39% | 4.77% |
| 3-year CD | 4.85% | 3.44% | |
| 3-year Treasury note | 4.82% | 3.66% | 5.16% |
| 5-year CD | 4.50% | 3.20% | |
| 5-year Treasury note | 4.89% | 3.72% | 5.23% |
| I bond (first 6 months) | 4.26% | 3.24% | 4.56% |
How the math works: a bank yield keeps 71% after tax (100% minus 24% minus 5%). A Treasury yield keeps 76% (100% minus 24%). So a 4.46% Treasury yields 4.46% × 0.76 = 3.39% after tax, and a bank would need to pay 3.39% ÷ 0.71 = 4.77% to match.
Worked example. You have $50,000 for one year. A 4.50% CD earns $2,250 before tax and about $1,598 after tax. A 4.46% 1-year Treasury earns $2,230 before tax and about $1,695 after tax. The Treasury puts roughly $97 more in your pocket, despite the lower headline rate. Check any CD's earnings with the CD calculator. In a state with no income tax, the CD would win by a small margin instead.
Liquidity and Penalties
- High-yield savings: withdraw any time with no penalty. The rate is variable and can drop whenever the bank decides, often soon after the Federal Reserve cuts rates.
- CDs: the rate is locked for the term, which protects you if rates fall. Taking money out early usually costs a penalty, commonly several months of interest, and the size varies a lot by bank and term. Read the penalty terms before you open one. A no-penalty CD trades a slightly lower rate for the right to withdraw early.
- Treasuries: T-bills mature in 4 to 52 weeks, and notes run 2 to 10 years. You can sell before maturity through a brokerage, but the price depends on rates at the time: if rates have risen, you may get back less than you paid. Holding to maturity returns the full face value.
- I bonds: you cannot cash them for 12 months, and if you cash them before 5 years you give up the last 3 months of interest (TreasuryDirect).
Safety. Bank deposits are insured by the FDIC up to $250,000 per depositor, per insured bank, for each account ownership category (FDIC). Credit unions have equivalent NCUA coverage. Treasuries are backed by the full faith and credit of the US government, with no dollar cap.
I Bonds: The Inflation-Protected Option
I bonds bought from May 1 through October 31, 2026 earn a 4.26% composite rate for their first six months: a 0.90% fixed rate that lasts for the life of the bond, plus an inflation rate that resets every six months (TreasuryDirect). The Treasury announces the rate for bonds bought from November 2026 on November 1.
- You can buy up to $10,000 in electronic I bonds per person per calendar year at TreasuryDirect.
- Interest is exempt from state and local income tax, and you can defer federal tax until you cash the bond.
- The 0.90% fixed rate means an I bond always earns at least 0.90% above inflation, which no CD or savings account guarantees.
I bonds work best for money you will not need for at least a year and want to protect from inflation. The $10,000 limit and the 12-month lock make them a supplement, not a full cash strategy.
When Each One Wins
| Option | Best for | Watch out for |
|---|---|---|
| High-yield savings | Emergency fund, money you may need any day | Rate can fall at any time |
| CD | Locking today's rate for a known future expense; savers in states with no income tax | Early withdrawal penalty |
| Treasury bills and notes | Higher after-tax yield in states with an income tax; large balances above FDIC limits | Price changes if sold early |
| I bonds | Inflation protection for money you can leave for 1 to 5 years | $10,000 yearly limit, 12-month lock |
Many savers use more than one. A common setup: three to six months of expenses in a high-yield savings account, then a ladder of CDs or Treasuries for money with a known timeline. The CD ladder calculator shows how staggering maturities keeps part of your money available every year, and the savings calculator shows how regular deposits grow at today's rates. If you are deciding between cash and investing for the long term, see how to start investing with $1,000.
See exactly what a CD will earn at your rate and term.
Open the CD CalculatorFrequently asked questions
Is a CD or a high-yield savings account better right now?
As of October 19, 2026, top 1-year CDs pay about 4.50% APY and top savings accounts about 4.25%. A CD locks in the rate, which protects you if rates fall, but charges a penalty for early withdrawals. A savings account is better for an emergency fund or money you may need soon.
Are Treasury bills better than CDs?
Often, after tax. Treasury interest is exempt from state and local income tax. For someone paying 24% federal and 5% state tax, a 4.46% 1-year Treasury is worth about the same as a 4.77% CD, so it beats a 4.50% CD. In a state with no income tax, the higher headline rate usually wins.
What is the current I bond rate?
I bonds bought from May 1 through October 31, 2026 earn 4.26% for their first six months, including a 0.90% fixed rate. The Treasury announces the rate for November 2026 through April 2027 purchases on November 1, 2026.
Are CDs and Treasuries safe?
Yes, within limits. CDs at insured banks are covered by the FDIC up to $250,000 per depositor, per bank, per ownership category, and credit union CDs have similar NCUA coverage. Treasuries are backed by the US government. A Treasury sold before maturity can lose value if rates have risen, but one held to maturity pays its full face value.
How are CD and Treasury interest taxed?
CD and savings account interest is taxed as ordinary income by the federal government and by your state. Treasury bill, note and bond interest is taxed federally but not by states or localities. I bond interest is also state tax-free, and federal tax can be deferred until you cash the bond.