Core Insights - The article discusses the advantages of using alternatives to traditional savings accounts, specifically focusing on certificates of deposit (CDs) and Treasury bills (T-bills) as viable options for earning higher interest rates [1] Group 1: Treasury Bills (T-bills) - T-bills have seen a surge in interest, with 3.7 million new accounts opened in 2022 compared to just 2.4 million from 2011 to 2021 [2][3] - T-bills are sold at a discount, with returns equivalent to 3.66% to 4.16% APY depending on maturity dates, which range from 4 to 52 weeks [4] - T-bills are backed by the U.S. government, making them a safe investment option [3][15] Group 2: Certificates of Deposit (CDs) - As of 2022, only 6.5% of American adults held a CD, but interest in CDs has increased due to higher interest rates [5] - CDs offer fixed interest rates, with current best rates around 4% APY, and terms can vary from one month to ten years [6][14] - Withdrawals from CDs before maturity incur penalties, making them less liquid compared to T-bills [7][15] Group 3: Tax Considerations - Earnings from T-bills are subject to federal income tax but exempt from state and local taxes [10][12] - CD interest is taxable at federal, state, and local levels, potentially leading to a higher tax burden compared to T-bills [13][15] Group 4: Comparison and Decision Factors - T-bills are more suitable for short-term savings goals due to their liquidity and higher APY compared to savings accounts [14][16] - For larger investments, T-bills allow up to $10 million in non-competitive bids, while CDs are limited to $250,000 per depositor per bank [17] - If locking in a high APY for several years is desired, CDs are preferable as they can have terms longer than the 52 weeks maximum for T-bills [17]