High-Yield Savings vs. T-Bills: Where Should Your Cash Live?

In the low-rate years before 2022, parking money in safe, boring vehicles didn’t feel very rewarding. Savings accounts paid next to nothing, and Treasury bills were an afterthought for most everyday savers. Then interest rates shot higher. Suddenly you could see yields around 5% on both high-yield savings accounts and short-term U.S. Treasury bills. Dinar Recaps+1

That shift is exactly what the Yahoo Finance article you shared digs into: if both options are paying attractive rates, how do you decide where your money should go? The answer comes down to what these tools are, how they work, and how soon you’ll need the money.

What a High-Yield Savings Account Really Is

A high-yield savings account, or HYSA, is simply a savings account that pays a much higher rate than a standard bank savings account. It sits at a bank or credit union, looks and feels like any other savings account, and in most cases your deposits are insured up to $250,000 per depositor, per bank, by the FDIC (or NCUA for credit unions). Dinar Recaps+1

The core idea is that your cash stays liquid. You can move money in and out electronically, link it to your checking account, and use it as a home base for your emergency fund or near-term goals. The trade-off is that the interest rate is variable. Banks can raise or cut that rate whenever they choose, usually in response to changes in the broader interest-rate environment.

That variability matters because the national average savings account rate is still well under 1%, but the most competitive high-yield accounts may pay around 4–5% APY or more. Dinar Recaps+1 If you’re willing to shop around and occasionally move your money, a HYSA lets you capture more of that higher-rate environment without giving up daily access to your cash.

The catch: every dollar of interest is generally taxable at both the federal and state level as ordinary income. There’s no special tax break just because it’s “savings.”

What a Treasury Bill Is and How It Works

Treasury bills, or T-bills, are short-term IOUs issued by the U.S. government. When you buy one, you’re effectively lending money to the government for a set period—typically 4, 8, 13, 26, or 52 weeks. Dinar Recaps

Instead of paying monthly interest, T-bills are sold at a discount and mature at their full face value. For example, you might pay $9,800 for a bill that matures at $10,000 in six months; the difference is your interest. Current yields on short-term T-bills have recently been in the rough neighborhood of 4.2% to 5% depending on the term and market conditions. Dinar Recaps+1

One big advantage is safety. Because T-bills are backed by the full faith and credit of the U.S. government, they’re considered among the safest investments in the world. Another advantage is tax treatment: the interest is fully taxable at the federal level but generally exempt from state and local income tax, which can be a meaningful benefit if you live in a high-tax state. Reportify

Liquidity is where things start to look different from a savings account. If you hold a T-bill to maturity, your payoff is straightforward and there is no price risk in between. If you need your money early, you can usually sell it on the secondary market through a brokerage account, but you may get slightly more or less than you paid depending on how interest rates have moved.

The Real Trade-Off: Flexibility vs. Commitment

On paper, a 5% HYSA and a 5% T-bill look very similar. In practice, they serve slightly different purposes.

A high-yield savings account excels when flexibility is your top priority. You can top it up whenever you want, pull money out quickly if your car dies or you lose your job, and treat it as a revolving bucket for near-term expenses: upcoming travel, property taxes, insurance premiums, or just a healthy emergency fund. The variable rate means your return may drift up or down over time, but you aren’t locked into a specific maturity date.

Treasury bills shine when you have a defined time horizon and money you truly do not need to touch for a while. Maybe you are setting aside cash for a tax bill next year, a down payment you plan to use in six to twelve months, or a planned tuition payment for a specific semester. In those cases, you might prefer the certainty of a locked-in yield for a known time period, especially if that yield is competitive with the best savings accounts. Dinar Recaps+1

In other words, HYSAs give you flexibility with a floating rate, while T-bills give you commitment with a fixed rate.

Other Factors the Article Highlights

The Yahoo piece also draws attention to a few practical details that can tilt the decision one way or the other.

One factor is how rates might change. With a HYSA, you benefit if banks keep raising yields but you’re exposed if they start lowering them. With a T-bill, your rate is locked for the life of the bill: that is comforting if you think rates might fall, but it can feel limiting if rates continue to climb and you are stuck in an older, lower-yield bill until it matures.

Access and ease of use matter too. Opening a high-yield savings account is usually as simple as an online application with a bank or fintech firm, and moving money to and from your checking account becomes routine after that. T-bills are just as accessible in principle, but the mechanics can feel a little more technical, especially if you buy them directly through TreasuryDirect rather than via a brokerage account.

Then there’s taxation. HYSA interest is taxable at both the federal and state level, while T-bill interest gets a break from state and local tax. If you are in a high-tax state and investing a meaningful amount of cash, that difference in after-tax yield can add up. Reportify

Finally, the article underscores something important: neither option is designed to beat long-term stock market returns or outpace inflation over decades. They are tools for short- to mid-term savings—places to keep money safe and productive while you wait to use it, not long-term growth engines.

So Which One Is “Right” for You?

The punchline from the article is that there isn’t a universal winner. Both high-yield savings accounts and Treasury bills can be excellent choices; the best fit depends largely on your time frame and how much flexibility you need.

If you are building or maintaining an emergency fund, handling unpredictable expenses, or just want a safe place where you can move cash in and out freely, a high-yield savings account usually makes more sense. The ease of access and simple structure outweigh the fact that the rate can change.

If you have money you know you will not need for several months and you want to lock in a specific yield for that period, T-bills can be very appealing, especially once you factor in the state and local tax advantage. In that case, the minor inconvenience of buying and holding them to maturity can be a fair trade-off for the predictability and potential tax benefit.

Many savers will find that a mix works well: keeping core emergency funds and near-term spending in a high-yield savings account, while using T-bills for cash that’s earmarked for specific goals a few months down the road.

Bringing It Back to Your Own Plan

Higher interest rates have turned short-term cash management into a more interesting—and more rewarding—part of financial planning. The key is to match the tool to the job.

Ask yourself how quickly you might need the money, how comfortable you are with rates changing over time, and whether the state tax benefit of T-bills matters in your situation. From there, you can decide whether your next dollar of savings is better off in a flexible high-yield account, a time-bound Treasury bill, or some combination of both.

And as always, if you’re unsure how these choices fit into your broader investment and retirement plan, this is a great area to talk through with a qualified advisor who can look at your full picture rather than just the headline yield.