I was looking at treasury rate and CD rates . And It looks like Treasury rate is higher than CD . And with my own experience it is easy to buy either CD or Treasury. So My question why people buy CD if Treasury is offering higher rate. At one point in time, I did buy CD, but now if I need to invest in cash equivalent, I use Treasuries.

So if I can know pros and cons of Certificate of Deposits v/s Treasury that will be helpful.

  • (Most). banks will automatically roll over interest into a new auto-purchased CD at the end of the term. Will 1-year Treasuries do that? Or do I have to remember to automatically buy new ones, and let the interest accumulate as cash until there’s enough to buy another Treasury?
    – RonJohn
    Nov 2, 2022 at 4:16
  • That could get really annoying if you have a CD ladder where ones renew each month.
    – RonJohn
    Nov 2, 2022 at 4:18
  • Lastly, rate hunting means you’ll have CDs spread over many banks. Very inconvenient, and an organizational hassle.
    – RonJohn
    Nov 2, 2022 at 4:20
  • @ronjohn agree that it could become inconvenient
    – puzzled
    Nov 3, 2022 at 1:32

2 Answers 2


As your links show, the gap is quite small: about 4.5% versus 4% for 1-year Treasuries vs CD's. That's a $50 difference over a year if you're saving $10K, likely not worth the trouble. Many investors don't understand Treasuries as well as CD's anyway, or know how to buy them.

These aren't the only comparable options, anyway: I-Bonds currently have a yield over 9%, going down November 1 to perhaps 6-7% for the next six months, but still dramatically above either of the yields you suggest. These have strict purchase limits, but presumably we're talking mainly about individual investors here, few of whom are considering putting hundreds of thousands or millions of dollars into short-term bonds or CDs.

There are also TIPS, currently with a real yield around 1.5%, which is also currently much better than a 4%ish nominal yield; there are no 1-year TIPS, but you can always sell on the open market (at risk of the value having dropped in the intervening time.)

  • But if you aren't holding the TIPS for the duration, then you run a risk of losing money if you try to sell and rates have gone up substantially. Nov 1, 2022 at 4:12
  • 1
    @BrianBorchers Sure, I added that for clarification. I would certainly take I-Bonds over TIPS right now if I wanted a really safe stash for one year. Nov 1, 2022 at 17:18
  • 1
    What's the current real yield on a 9-year-old TIPS with one year left to maturity? Where could I find that information? Nov 7, 2022 at 20:03
  • @BrianBorchers You should be able to look it up on your broker's site. They'll list bonds with the current yield-to-maturity; for TIPS this is the real yield, and for non-TIPS the nominal yield. When I check this, there are only three TIPS maturing in the next year, in two, five, and eight months, so there's not much meaningful information; but extending to the next three years, the real yields are around 2%. Nov 7, 2022 at 21:49
  • Thanks for the explanation- I hadn't realized it would be as simple as "yield to maturity is the real yield", but now that makes perfect sense. Nov 8, 2022 at 1:23

So My question why people buy CD if Treasury is offering higher rate.

If they can purchase a CD directly from their bank, they will do that versus establishing an account at Treasury Direct. They don't even have to transfer the funds outside of their bank

And It looks like Treasury rate is higher than CD.

Maybe. My credit union also offers some CDs that offer the opportunity to bump up the interest rate during the next year. They also allow you to add more funds to the CD. Mine also gives a slightly better rate if you have enough loyalty points.

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