Are Treasury Bills Safer Than Bank CDs?

Both are low-risk ways to earn yield on cash, but the tradeoffs differ.

Backing

• CDs: FDIC insurance up to $250,000 per depositor, per bank.
• Treasury bills: Full faith and credit of the U.S. government.

Taxes

• Treasury interest is exempt from state and local income tax.
• CD interest is fully taxable at federal and state level.

Liquidity

• CDs charge early-withdrawal penalties.
• T-bills can be sold on the secondary market, though at market price.