Disclaimer: This is general financial education, not personalized investment or financial advice. ClearValue Lending is not a bank, registered investment advisor, or financial planner. Savings rates change frequently — verify current rates directly with the institution before making any decisions.
Most people keep their emergency fund and short-term savings in whatever checking or savings account their big bank offered by default. That account often pays somewhere near the FDIC national average for savings — which, as of early 2025, sat around 0.41% APY per FDIC's published weekly rate data.
The problem: inflation has been running well above that level for years. When your savings account pays 0.41% and inflation is running at 3%, your nominal balance grows while your real purchasing power shrinks. You're effectively losing money in slow motion.
Brian walks through this math in the video below — watch his full breakdown on the @clearvaluetax9382 channel. This companion covers the three main alternatives and the specifics that the video doesn't have room for: insurance structure, tax treatment, and how to evaluate the trade-offs for your situation.
The three higher-yield alternatives
All three work for cash you don't need locked up for years. Each has a different risk profile, access mechanism, and tax treatment.
1. High-Yield Savings Accounts (HYSA)
Online banks — with lower overhead than branch-based banks — typically offer savings rates significantly above the national average. HYSA deposits at FDIC-member banks are insured up to $250,000 per depositor per bank, same as a traditional savings account. Access is straightforward: transfer to your linked checking account, typically settling in 1–3 business days.
The key distinction from a traditional savings account is simply where the account is held. Online banks pass their cost savings to depositors through higher rates. The mechanics — FDIC protection, deposit account, interest paid monthly — are identical to a traditional savings account.
Rates change frequently. At the time of Brian's video, some online banks were advertising rates in the 4%+ range. Those rates fluctuate with the federal funds rate — compare current rates before opening an account.
2. Money Market Accounts (MMA)
A money market account is a deposit account (FDIC-insured, same $250K limit) that typically offers check-writing privileges and sometimes a debit card. Rates are competitive with HYSA at many institutions, though often slightly lower. Minimum balance requirements are more common.
The practical distinction from a HYSA: if you occasionally need to cut a check or use a debit card for a large purchase without a transfer delay, an MMA provides that flexibility. For pure savings parking where you'll rarely need immediate access, HYSA rates are often more competitive.
3. Short-term Treasury Bills (T-bills)
Treasury bills are short-term debt obligations issued directly by the U.S. federal government — not by a bank. Maturities range from 4 weeks to 52 weeks. They are not FDIC-insured, but they don't need to be: T-bills are backed by the full faith and credit of the United States government, which makes them the benchmark for risk-free assets.
Two structural advantages over HYSA that often go unmentioned:
- FDIC limit bypass: For amounts above the $250,000 FDIC cap, T-bills eliminate the need to spread deposits across multiple banks. There is no coverage ceiling on the amount of T-bills you can hold.
- State and local tax exemption: T-bill interest is taxable at the federal level but exempt from state and local income tax under federal law (IRS Publication 550). In high-tax states — California (13.3% top rate), New York, New Jersey — this exemption can make the after-tax yield of a T-bill with a lower nominal rate higher than an HYSA at a higher nominal rate.
You purchase T-bills at a discount and redeem at face value; the difference is your return. Individual investors can buy directly through TreasuryDirect.gov with no fees, or through a brokerage account for secondary-market liquidity.
FDIC vs. Treasury-backed: the safety distinction
| Account Type | Safety Mechanism | Limit |
|---|---|---|
| HYSA (FDIC-member bank) | FDIC deposit insurance | $250,000 per depositor per bank per ownership category |
| Money Market Account | FDIC deposit insurance | Same as above |
| Treasury Bills | U.S. government full faith & credit | No insurance needed; no limit |
Note: "money market funds" (offered through brokerages) are different from "money market accounts" (bank deposit accounts). Money market funds are investment products, typically covered by SIPC (not FDIC), and are not guaranteed against loss — they can, in rare circumstances, "break the buck." SIPC protects against broker failure, not investment losses. When evaluating a money market product, verify whether it is a FDIC-insured deposit account or a brokerage-held fund.
Looking for the best HYSA rates right now?
Our HYSA comparison tracks current rates across major online banks — updated regularly. No recommendations, no personalized advice; compare and decide for yourself.
Compare HYSA rates →How to evaluate the trade-offs
A simple decision framework:
- Under the FDIC limit, need easy access? HYSA at an online bank is the lowest-friction option.
- Occasionally need check-writing access? Money market account.
- Above the FDIC limit, or in a high state-income-tax state? T-bills eliminate the insurance gap and reduce the state-tax drag.
- Comfortable with fixed maturity dates? T-bills ladder well — buy rolling 4-week, 13-week, or 26-week bills so a portion matures each month.
None of these is the right answer in every situation. ClearValue Lending is not a financial advisor — this is the framework for thinking through it. Pair it with Brian's video for the specific rate context at the time of recording, then compare current rates before you act.
Compare current HYSA rates
Rates change with Federal Reserve policy. The HYSA landscape in particular moves quickly when the Fed adjusts the federal funds rate. Use our HYSA comparison — updated regularly — to see what online banks are offering right now.
Related reading
- Building a Simple 4-Fund Portfolio: How Index Investing Actually Works — Brian's framework for long-term investing once your short-term cash is working harder
- Managing Personal Credit Card Debt While Running a Business — when high-yield savings alone isn't enough; tackling debt on the other side of the ledger
ClearValue Lending is a financial education platform — not a bank, lender, broker, or registered investment advisor. Nothing on this page is personalized financial advice. Savings and investment rates change frequently — verify current rates with the institution directly. Consult a qualified financial advisor for guidance specific to your situation.
