HYSA vs T-Bills: Where to Park Your Cash in 2025

HYSA or T-Bills?

In 2025, the choice between high-yield savings accounts (HYSAs) and U.S. Treasury bills (T-Bills) has become one of the most important decisions for cash-focused investors. With both offering compelling yields amid a high-rate environment, deciding where to park your money isn’t as simple as chasing the highest APY. It’s about matching your financial needs—liquidity, tax treatment, predictability—with the features of each vehicle. Whether you’re managing an emergency fund, holding cash for upcoming expenses, or building a conservative portfolio, understanding the real pros and cons of HYSAs vs. T-Bills is essential. In mid-2025, that conversation is more relevant than ever.

Let’s start with the numbers. As of June 2025, leading HYSAs from online banks like Ally, Marcus, and CIT Bank are offering annual percentage yields (APYs) between 4.60% and 5.10%. Meanwhile, 13- and 26-week Treasury bills are yielding 5.10% to 5.35% on an annualized basis. On the surface, T-Bills seem to edge out HYSAs in terms of raw yield. But the story changes when you dig into how those returns are structured, taxed, and accessed.

High-Yield Savings Accounts: Flexible and Accessible

HYSAs are exactly what they sound like—savings accounts that offer higher interest than traditional brick-and-mortar banks. Most online institutions provide daily accrual of interest, compounding monthly, with FDIC insurance up to $250,000 per depositor. In 2025, the top HYSA rates are competitive, and the onboarding process is fast and fully digital.

The biggest advantage? Liquidity. Funds in an HYSA can typically be accessed at any time, with no penalties or delays (though federal rules limit withdrawals to six per month in some cases). For emergency savings or short-term goals, this makes HYSAs the go-to choice for instant access with little complexity. Additionally, many HYSAs integrate seamlessly with checking accounts or mobile apps, making transfers quick and convenient.

However, there’s one major drawback: APYs are variable. Banks can change rates at any time based on their funding needs or expectations about Fed policy. If the Federal Reserve cuts rates later this year—which remains a possibility—HYSA yields could drop quickly. That means your return isn’t locked in, and you may be exposed to rate risk if you’re holding large sums for extended periods.

Additionally, HYSA interest is fully taxable at federal, state, and local levels, making them slightly less attractive in high-tax states. For someone in California or New York, this could shave off a meaningful portion of your real return.

Treasury Bills: Predictable and Tax-Advantaged

T-Bills, by contrast, are short-term debt securities issued by the U.S. government with maturities ranging from 4 to 52 weeks. They are sold at a discount and mature at face value—the difference is your interest. For example, a 26-week T-Bill might be purchased for $975 and mature at $1,000, resulting in $25 of interest income.

One of the biggest advantages of T-Bills in 2025 is predictability. Your return is locked in the moment you purchase. You know exactly how much you’ll receive and when, which makes them ideal for cash flow planning. If you’re saving for a property tax bill, tuition payment, or known expense, T-Bills offer unmatched clarity.

Moreover, T-Bill interest is exempt from state and local income tax, making them significantly more tax-efficient than HYSAs—especially in high-tax jurisdictions. On a tax-adjusted basis, a T-Bill yielding 5.20% could outperform an HYSA yielding 5.00% by a wide margin depending on your state.

The tradeoff is liquidity. While T-Bills can be sold on the secondary market, doing so may result in a gain or loss depending on current interest rates. If you hold to maturity, you get your full principal and interest. But if you need the cash early, it’s not as simple as clicking “transfer” in your banking app. That said, when purchased via brokerages like Fidelity or Schwab, T-Bills can often be sold with tight bid-ask spreads and no fees, making them relatively accessible—just not instant.

Comparing the Two: Which Is Best in Mid-2025?

Feature	HYSA	T-Bill
Yield (mid-2025)	4.60% – 5.10% (variable)	5.10% – 5.35% (fixed)
Tax Treatment	Fully taxable	Exempt from state/local tax
Liquidity	Instant access	Locked unless sold early
Risk Level	FDIC-insured	Backed by U.S. government
Rate Predictability	No – can change anytime	Yes – known at purchase
Ideal Use Case	Emergency funds, flexible savings	Fixed-term goals, tax efficiency

For most investors, the best approach is not either-or, but both. Many are using HYSAs for their “liquid layer”—funds they might need within days—and T-Bills for planned expenses or slightly longer-term cash storage. This layered strategy allows for yield optimization without sacrificing access.

Example:

• $20,000 in HYSA for true emergencies

• $30,000 in laddered 13- and 26-week T-Bills for upcoming expenses

• $50,000 in a longer-term strategy (e.g., CDs or short-duration bond ETFs)

This kind of tiered cash strategy is becoming standard in 2025 among financially savvy investors, retirees, and even businesses managing corporate reserves.

Final Considerations

It’s worth noting that T-Bill purchases have become easier than ever, with brokerages offering automatic reinvestment, laddering tools, and even T-Bill ETFs like SGOV and BIL that offer daily liquidity with T-Bill exposure.

For those who prioritize yield and tax efficiency, T-Bills win.
For those who value speed, flexibility, and simplicity, HYSAs win.
For those who want both? You’re in luck—2025 is the rare year where cash can work both hard and smart, as long as you understand how to split it effectively.