If you’ve been staring at your pile of “don’t-lose-this” money and wondering where it should sleep at night, you’re not alone. In 2025, cash finally pays something again and that makes the choice between Treasury bills (T-bills) and high-yield savings accounts (HYSAs) a real debate instead of a yawn. Let’s talk like friends about what actually matters: safety, yield, taxes, liquidity, and the “will this stress me out?” factor.

• First, what each option really is (no jargon, no fluff)

• T-bills are short-term IOUs from the U.S. government with maturities ranging from 4 to 52 weeks. You buy them at a discount and get paid face value at maturity; the difference is your interest. You can buy them straight at auction or on the secondary market. They are backed by the full faith and credit of the U.S. government. (TreasuryDirect)

• High-yield savings accounts are bank savings accounts with above-average APYs. Your principal and interest are typically protected up to $250,000 per depositor, per FDIC-insured bank, per ownership category. Translation: spread your deposits if you’re over those limits. (FDIC)

• Safety: what “safe” really means

Both options are “sleep-at-night” safe but different flavors:

• T-bills: Not FDIC-insured, but backed by the U.S. government (this is as good as it gets in fixed-income land). If you’re ever confused by “insurance vs. backing,” the FDIC reminds us it doesn’t insure Treasuries because they’re government obligations themselves. (FDIC)

• HYSAs: Protected by FDIC insurance up to the limits noted above. If you’re using a credit union, the NCUA provides a similar framework. The key is to check the bank’s FDIC status and your ownership categories. (FDIC)

• Liquidity: can you grab your money fast?

• HYSAs: Usually instant or next-business-day access. This is your “I might need it Tuesday” cash.

• T-bills: Your money is tied up until maturity unless you sell on the secondary market, where price can move a little. For most people, that’s fine just match the bill’s term to when you’ll need the cash (4, 8, 13, 17, 26, or 52 weeks). (TreasuryDirect)\

Yield: where the numbers come from

HYSAs post an APY that can change at any time (banks move rates whenever they want). T-bill yields are set in auctions and move with broader markets. If you want a quick, official primer on how bills are issued and how the discount works, TreasuryDirect’s page is gold. (TreasuryDirect)

This year, one big market storyline is that Treasury has been issuing a lot of T-bills, pulling cash out of the Fed’s reverse-repo facility and occasionally straining market liquidity. That context helps explain why short-term yields have stayed attractive and why money market funds keep buying bills. (Barron’s)

• Taxes: the sneaky difference most folks miss

• T-bill interest is exempt from state and local income taxes (you still pay federal). If you live in a higher-tax state, that’s a quiet, meaningful bump to your after-tax return.

• HYSA interest is taxable at federal, state, and local levels. This matters more the higher your state tax rate is.

(Always talk to a tax pro for your specifics, but the structure above is the general rule—another reason T-bills get love in taxable accounts.)

• Fees and friction

• HYSAs: No trading mechanics. Just open, deposit, done. Watch for teaser rates that drop later.

• T-bills: No fund expense ratio if you buy directly at auction in TreasuryDirect or via a broker with $0 commissions; but there’s a tiny bit of learning curve to place orders the first time. TreasuryDirect’s walkthrough is straightforward. (TreasuryDirect)

• What about the cash-bucket strategy?

Think of your cash in three buckets:

1. Emergency hand-cash (instant): Keep a month or two of expenses in a HYSA. If your tire pops at 9 p.m., you don’t want to log into a brokerage and sell a bill.

2. Known near-term expenses (dated): If you know property taxes are due in 13 weeks, a 13-week T-bill lines up perfectly. No guessing.

3. Opportunistic cash (semi-liquid): Ladder T-bills monthly (4 , 8 , 13 , 17 week, etc.) so something matures every few weeks. You’ll likely get a competitive yield with minimal risk and lower state/local tax drag. (TreasuryDirect)

FDIC coverage tricks most people overlook

If you prefer a HYSA, you can legally boost coverage by using multiple ownership categories (e.g., single, joint, certain retirement accounts), and by using more than one FDIC-insured bank. The FDIC’s “Understanding Deposit Insurance” explainer and FAQs are worth bookmarking so you’re not guessing. (FDIC)

• A friend-to-friend recommendation

• If you need maximum convenience and instant access, a solid HYSA is awesome for your first bucket.

• If you’re in a higher-tax state or can plan your cash needs a few weeks out, T-bills often edge out HYSAs after tax.

• If you hate decision fatigue, do both: HYSA for the first month of needs, then ladder T-bills for the dates you can map.

And hey don’t overthink it. Pick a setup you’ll actually maintain. Perfect on paper is useless if you never log in.

Authoritative resources referenced in this article:
 Treasury bills overview (TreasuryDirect). (TreasuryDirect)
 FDIC coverage basics and FAQs. (FDIC)
 Context on the current T-bill issuance environment (Barron’s). (Barron’s)