Where to park cash right now: HYSA, T-bills, money market, CDs (tradeoffs explained)

If you're shopping for the best place to park cash, you've probably already noticed that the "best yield" answer is a moving target — rates change weekly, "promotional" APYs expire, and what was the highest-yielding option six months ago may not be today. The more durable question, and the one this page is built around, is how the four mainstream parking options actually differ on the things that don't change every quarter: liquidity, what kind of guarantee stands behind your dollars, tax treatment, minimums, and operational simplicity.

This is for someone with cash in Bucket 1 (emergency reserve) or Bucket 2 (1–3 year known needs) from the pillar framework on what to do with savings. The right vehicle depends on when you'll need the money, what state you live in, and how much operational hassle you'll tolerate — not on which one's APY is 0.10% higher this week.

The four mainstream options at a glance

There are really only four serious answers for parking cash you want to keep capital-stable:

• High-yield savings accounts (HYSAs). Deposit accounts, typically online, paying more than brick-and-mortar savings.
• Money market funds (MMFs). Mutual funds holding short-term debt.
• U.S. Treasury bills (T-bills). Direct U.S. government debt with maturities under one year.
• Certificates of deposit (CDs). Time deposits at a bank, either direct (bank CDs) or via a brokerage (brokered CDs).

Yes, you could also park cash in a checking account or under a mattress. Neither earns return, both lose to inflation, and neither is the topic. Below, we go vehicle by vehicle on what actually distinguishes them.

High-yield savings accounts

A HYSA is a savings deposit at a bank, almost always FDIC-insured. The "high-yield" part is marketing — what's true is that online-first banks have lower overhead than branch banks and pass some of that through as higher interest.

What matters structurally:

• Backing. FDIC insurance up to the $250,000 standard insurance amount per depositor, per insured bank, per ownership category, per FDIC.gov. Joint accounts and individual accounts at the same bank count as separate ownership categories, which can stretch coverage for a household.
• Liquidity. Same-day or next-day transfer to a linked checking account. Some banks still limit certain withdrawal types under legacy Regulation D conventions, though the federal cap was suspended in 2020.
• Yield. Variable. Banks can — and do — cut HYSA rates at any time, often without much notice and often quietly.
• Tax treatment. Interest is taxable as ordinary income at federal, state, and local levels. No exemptions.
• Minimum. Most are zero or trivial.

A HYSA is the right answer when you want operational simplicity above all else — one login, one balance, one statement, no maturity dates to track. It's not the right answer if you have more than the FDIC limit at one bank, if you live in a high-tax state and could capture a state-tax break elsewhere, or if you want to lock a rate.

Money market funds (and why they're not money market accounts)

This is the most-confused pair of products in personal finance. They sound identical. They are not.

A money market fund is a mutual fund — registered under the Investment Company Act of 1940, regulated by the SEC, and held in a brokerage account. It invests in short-term debt: T-bills, commercial paper, repurchase agreements, and other near-cash instruments. There are three regulatory categories: government MMFs (mostly Treasuries and agency debt), Treasury MMFs (Treasuries only), and prime MMFs (which can hold corporate paper).

A money market account is a deposit account at a bank — FDIC-insured up to the standard $250,000 limit, often with check-writing privileges, and operationally similar to a high-yield savings account.

The differences that matter:

• Backing. MMFs are not FDIC-insured. Brokerage custody is protected by SIPC up to $500,000 per customer ($250,000 cash), but SIPC protects custody, not market value. A money market account is FDIC-insured.
• Capital stability. Government and Treasury MMFs maintain a stable $1 net asset value under SEC rules and have an excellent historical track record, but "breaking the buck" is theoretically possible — it has happened twice in modern history during severe credit events. Money market accounts cannot lose nominal value within FDIC limits.
• Yield. MMF yields move with short-term rates and pass through to investors with minimal lag. Money market account rates are set by the bank and tend to lag.
• Tax treatment. Treasury MMFs and government MMFs may pass through some or all of the federal Treasury exemption from state and local income tax depending on the fund's holdings and your state's rules. Money market accounts have no such exemption.

For most savers in a brokerage account, a Treasury or government money market fund is a reasonable Bucket 1 vehicle that captures most of the state-tax advantage of direct Treasuries with simpler operational mechanics. For someone who wants pure FDIC backing and operational simplicity, a money market account (or HYSA) is the deposit-side answer.

U.S. Treasury bills

T-bills are direct obligations of the U.S. Treasury, sold at auction with maturities of 4, 8, 13, 17, 26, and 52 weeks. They are the structural reference point for "risk-free" cash in U.S. dollars.

What matters:

• Backing. Full faith and credit of the United States government. No per-account dollar cap on the backing — a $1,000 T-bill and a $10,000,000 T-bill are guaranteed by the same sovereign credit.
• Tax treatment. Interest is exempt from state and local income tax, per IRS Publication 550. For a high-tax-state resident in a high marginal bracket, this can be worth roughly 30–80 basis points of after-tax yield versus a CD or HYSA at the same headline rate. Consult a tax professional for your specific situation.
• Liquidity. Held to maturity at par, or sellable on the secondary market through a brokerage with next-day settlement and small price fluctuation.
• Minimum. $100 face value via TreasuryDirect, which is the government's own free portal. Brokerages typically have similar low minimums.
• Operational tradeoff. TreasuryDirect is reliable but the interface is dated; brokerage purchases are easier but lose some of the auto-reinvest convenience of TreasuryDirect's auction-roll feature.

For Bucket 2 money matched to specific known dates (April taxes, September tuition, March home closing), buying a T-bill that matures right before the date is the cleanest match of any cash-parking option. For ongoing emergency-reserve liquidity, a T-bill ladder (below) keeps a portion always coming due.

Certificates of deposit — bank versus brokered

A CD is a time deposit. You commit money for a defined term in exchange for a fixed rate. There are two flavors that operate quite differently:

• Bank CDs. Opened directly with a bank. FDIC-insured up to the standard $250,000 limit at that single institution. Early withdrawal forfeits some interest — typically 90 to 365 days' worth depending on term. Interest typically compounds inside the CD.
• Brokered CDs. Purchased through a brokerage, which acts as a distributor for CDs issued by many different banks. Each issuing bank's CD carries its own $250,000 FDIC limit, so a single brokerage relationship can hold well over $1M in aggregated coverage by spreading across issuers. Brokered CDs trade on a secondary market — sell before maturity at the prevailing price (which can be above or below face) instead of paying a fixed early-withdrawal penalty. Most brokered CDs pay simple interest rather than compounding.

What matters across both:

• Backing. FDIC up to the limit per issuing bank.
• Liquidity. Bank CD: locked, with penalty exit. Brokered CD: tradeable, with price risk.
• Yield. Locked at purchase. This is a feature when rates are about to fall and a bug when they're about to rise.
• Tax treatment. Ordinary income, no state-tax exemption.

CDs make most sense when you want to lock a known rate for a known term to match a known need — and when the headline rate beats the after-tax yield of a comparable T-bill once the state-tax exemption is factored in. In high-tax states, that bar is higher than it looks at the surface.

How to choose: a practical decision tree

Walk through these in order:

1. Is this Bucket 1 (emergency, fully liquid) or Bucket 2 (1–3 year known need)? Bucket 1 favors HYSA or government MMF for operational simplicity. Bucket 2 favors maturity-matched T-bills or short CDs.
2. Is your balance over $250K at any single institution? If yes, FDIC coverage forces a structure decision: spread across banks, use a brokered-CD network, or move to T-bills (no per-account limit on backing).
3. What's your state's income tax rate? High-tax states (CA, NY, NJ, OR, MN, etc.) push the answer toward Treasuries because the state-tax exemption is a real after-tax advantage. No-income-tax states (FL, TX, WA, TN, NV) make the after-tax math closer between options.
4. Do you want to lock a rate? If you expect rates to fall and you want the certainty, lean CD or longer T-bill. If you expect rates to rise or want maximum flexibility, lean HYSA, MMF, or short T-bills.
5. How much operational complexity will you tolerate? A single HYSA is one statement. A T-bill ladder across maturities is more moving parts. A multi-bank CD program through a network is one statement again, but setup work upfront.

For current yields run through your specific tax bracket and state, ask Kronos — yields move too fast for an article to be accurate, and the right answer often hinges on a 30-basis-point after-tax difference that depends on numbers we don't know about you.

Building a T-bill ladder

If you've decided Treasuries are the right vehicle for some or all of your parked cash, a ladder is the structure that gives you both yield and ongoing liquidity.

A simple four-rung ladder works like this:

1. Divide the balance you want laddered into four roughly equal parts.
2. Buy 13-week, 26-week, 39-week, and 52-week T-bills (using the available auction maturities — 17-week and 26-week T-bills are commonly substituted for 39-week to match what's actually issued).
3. As each rung matures, reinvest the proceeds into a new 52-week T-bill.
4. Within roughly 13 weeks, you will always have a rung coming due — meaning a quarter of your laddered balance is accessible without selling on the secondary market.

The ladder accomplishes three things at once: it smooths reinvestment risk if rates change, it preserves the full state-tax exemption and Treasury backing on the entire position, and it converts what would otherwise be a 52-week lock-up into something with quarterly liquidity windows. For Bucket 1 emergency reserves above the FDIC limit, or for Bucket 2 money where you want better tax treatment than a CD provides, the ladder is the standard answer.

What this page deliberately doesn't tell you

You'll notice we haven't named a single bank, brokerage, money market fund, or CD issuer. That's intentional — those decisions involve product-specific factors (current promotional rates, account-opening hassle, customer service quality, integration with your existing brokerage) that change frequently and that any honest comparison would re-do annually. We've also avoided current yield numbers, because they are out of date the day they're published.

What's stable across cycles is the structure: which vehicle is FDIC-backed versus Treasury-backed, which gets the state-tax exemption, which trades on a secondary market, which locks a rate. Pair that structural understanding with a current-rate scan (Kronos can do this in seconds for your bracket and state) and the decision becomes mechanical, not magical.

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This article is for educational purposes only and does not constitute personalized investment, tax, or legal advice. Tax treatment varies by individual situation; consult a qualified tax professional. Yields and rates referenced in any external source change frequently. Clockwise Capital is a registered investment adviser; our Form ADV Part 2A is available at adviserinfo.sec.gov.