Treasury payments and high-yield financial savings accounts are each secure locations to earn curiosity on money that should stay accessible within the short-term. Liquidity wants might dictate which one you select.

Potential rate of interest: 4%+

Treasury payments, or T-bills, are government-backed investments with phrases starting from 4 weeks to 1 yr. You should buy T-bills from a financial institution or brokerage, or make investments straight by way of TreasuryDirect.gov.

On TreasuryDirect, you may hyperlink your checking account to the location and spend money on your T-bill of selection — and have your cash mechanically reinvested when that T-bill matures, if desired.

One other comparatively new choice obtainable is a Treasury account, which is obtainable at some brokerage companies and does the work of shopping for T-bills for you, holding them to maturity after which reinvesting the earnings. (NerdWallet has a partnership with Atomic Treasury to supply a Treasury account. Public, a web based dealer NerdWallet opinions, additionally provides a Treasury account.)

The benefit of Treasury payments, apart from their low threat and the truth that they’re government-secured, is that the curiosity you earn is state and native tax-free. You have to maintain the T-bill to maturity to appreciate the complete achieve, so that they’re an choice for money you don’t want instantly. You may promote T-bills early, however you won’t get full worth.

Many brokers additionally provide a Treasury exchange-traded fund (ETF) or index fund that allows you to spend money on a basket of various Treasury merchandise.

Potential rate of interest: 4%+

Excessive-yield financial savings accounts provide increased curiosity than financial savings accounts at conventional banks. Many banks providing these charges are on-line, and in the event that they’re FDIC-insured, they provide the identical protections in your cash as brick-and-mortar banks.

If you will get 4% or extra (or near it), you’ll handily beat the nationwide common rate of interest for financial savings accounts, which is 0.42%.

Like most financial savings accounts, HYSAs usually don’t provide entry to funds with check-writing or debit playing cards, however money will be transferred out as wanted, so these accounts are thought of liquid.