SwitchWize decision guide
The rate on the page is not what you keep. Your state taxes bank interest but not T-bill interest. Your plans decide how much the lock on a CD or a T-bill can cost you.
What you can expect
Quick answer
Compare what you keep, not the rate. Treasury bill interest has no state income tax, while savings and CD interest do. In a state with income tax, a T-bill can beat a bank account that pays a bit more. Savings still wins for money you may need any day.
See current savings ratesIf T-bills
Often best in a state with income tax, for money you will not need before the bill matures.
If CD
Can win when its rate is clearly higher and you are sure you will not need the money early.
If savings
Best for money you may need any day. No lock, but your state taxes the interest.
Key number to watch
With 22.00% federal and 5.00% state tax, a T-bill at 4.40% keeps as much as a bank account at 4.70%.
Test your situation
Change any number below to match your situation. No login is required. Saved decisions stay on this device, and signed-in users can revisit them across devices.
The money you are deciding where to put.
How long until you expect to spend it.
The yearly yield on the bill you would buy. The page starts at a recent 1-year Treasury yield SwitchWize tracks. Check TreasuryDirect or your broker for today.
APY is what you earn in a year, counting interest on interest. The page starts at a tracked rate. Replace it with the rate you are offered.
The page starts at a tracked rate. Replace it with the rate at your bank.
Your top federal income tax rate. All three options pay federal tax.
Your state income tax rate, plus any city income tax. Enter 0 if your state has no income tax.
Your best guess that a surprise forces you to use the money sooner.
Your answer so far
CD keeps the most: about $25.75 more than the Treasury bills over 12 months, after tax and the chance you need the money early. In your state, a bank account must pay about 4.70% to keep as much as a T-bill at 4.40%.
See the full breakdownCD keeps the most: about $25.75 more than the Treasury bills over 12 months, after tax and the chance you need the money early. In your state, a bank account must pay about 4.70% to keep as much as a T-bill at 4.40%.
T-bills
$856
interest after federal tax, minus expected selling cost
CD
$881
interest after tax, minus expected penalty
Savings
$803
interest after federal and state tax
Try a scenario
What could change this
With 22.00% federal and 5.00% state tax, a T-bill at 4.40% keeps as much as a bank account at 4.70%.
How certain: high
The T-bill pays at least as much as savings before tax, so it keeps more at any state tax rate.
How certain: high
The CD stays ahead only while your chance of needing the money early is below about 18.24%.
How certain: scenario dependent
Check these assumptions
CD keeps the most: about $25.75 more than the Treasury bills over 12 months, after tax and the chance you need the money early. In your state, a bank account must pay about 4.70% to keep as much as a T-bill at 4.40%.
A savings account lets you move money out any day. A T-bill can be sold before it matures, but at the market price. A CD usually charges a penalty.
Treasury bill interest is taxed by the federal government but not by states or cities. Bank interest is taxed by both.
Federal tax applies to all three.
You do not need to pick one. Keep what you may need soon in savings. Put money with a date in T-bills or a CD.
Educational illustration only. The right amount depends on your needs and timing.
Question 1
Yes: Use savings.
No: Go to the next question.
Question 2
Yes: Compare the T-bill with the bank rate that matches it after tax.
No: Compare the rates as they are.
Question 3
Yes: A CD that ends on your date can be worth it.
No: Choose T-bills that end on your date.
The calculator works out interest for each option over the months you enter. Bank interest pays federal and state tax. T-bill interest pays federal tax only. It then subtracts the expected cost of a CD penalty or of selling a T-bill early. The expected cost is the chance you enter times the full cost.
The savings and CD rates start at rates SwitchWize tracks. The T-bill yield starts at a recent 1-year Treasury yield. These are not offers to you. Replace them with today’s numbers.
Starting rates refresh with the SwitchWize rate system. Tax rules and sources are reviewed every quarter. Editorial conclusions do not depend on affiliate availability.
Terms of 4 to 52 weeks, $100 minimum, sold at a discount or at par, no state or local tax, can be sold before maturity.
Treasury bill interest is subject to federal income tax but exempt from state and local income taxes.
Starting values only. Enter the rates you would really earn.
No. The IRS says interest on U.S. Treasury bills is subject to federal income tax but is exempt from all state and local income taxes. Interest on bank savings and CDs is taxed by both.
Work out the bank rate that keeps as much after tax. Multiply the T-bill yield by one minus your federal rate. Divide by one minus your federal and state rates added together. The calculator does this for you.
Yes. TreasuryDirect says you can hold a bill until it matures or sell it before it matures. If you sell early, you get the market price, which can be a little more or less than you expect.
TreasuryDirect sets the minimum purchase at $100, in $100 steps. Terms run from 4 to 52 weeks.
TreasuryDirect says bills are sold at a discount or at face value. Your interest is the difference between what you paid and the face value you get when the bill matures.
They carry a different promise. T-bills are backed by the U.S. government. Bank deposits are insured up to $250,000 per depositor, per insured bank, per ownership category. Both are very safe within those limits.
No. Inside an IRA or 401(k), interest is not taxed each year. Compare the rates as they are.
When its rate is high enough to make up for your state tax, and you are sure you will not need the money early. The calculator shows the chance of needing the money where the CD stops winning.