🏦💵Smart Cash Decisions: Choosing Between No-Penalty CDs and T-Bills in 2025
The Real Question About Your Cash
There’s a quiet tug-of-war happening in your portfolio right now, and it isn’t about stocks. It’s about where to park your cash. Do you go with Treasury bills—the age-old safe haven? Or do you lock into no-penalty certificates of deposit (CDs) that now rival and sometimes outpace Treasury yields?
Both choices are about stability, liquidity, and safety. But one may be better suited to your situation, depending on whether taxes, flexibility, or short-term returns matter most to you. With yields sitting in the 3.7%–4.3% range as of late September 2025, the details decide which is superior.
The old assumption that Treasuries always win on safety is no longer the full story. Banks and digital platforms have stepped up, offering no-penalty CDs with strong annual percentage yields and the freedom to access funds early without the punishing costs of traditional CDs. It’s time to cut through the noise and see which path truly fits your needs.
Why No-Penalty CDs Deserve Attention
Unlike standard CDs, no-penalty versions give you fixed interest while still letting you withdraw principal if needed. Usually, you only need to keep funds in for a brief holding period—often just 6–7 days—before the option to exit penalty-free kicks in. That makes them a hybrid: part fixed-rate anchor, part liquid safety net.
Here are the standouts this month:
- Climate First Bank: Offering a 6-month no-penalty CD at 4.34% APY, edging above most Treasury bills. Minimum deposit is only $500, and there’s no maximum cap. Withdrawals are allowed after the first six days.
- Raisin Marketplace: Gives access to multiple institutions in one platform. Current offers include 3- to 5-month no-penalty CDs at 4.15% APY and a 12-month option from SkyOne Federal Credit Union at 3.9% APY. With just $1 to start, it’s open to nearly everyone. On top of that, Raisin is running a new-customer promotion: deposit $100,000 and you could secure up to $1,000 in bonus rewards, pushing effective yields closer to 4.9%.
- Marcus by Goldman Sachs: A straightforward option with a 4.15% APY on a 7-month CD. The platform is simple, the requirements are minimal ($500 minimum), and the FDIC insurance is standard.
These aren’t speculative plays. Every option carries federal insurance—FDIC for banks, NCUA for credit unions—protecting up to $250,000 per depositor. The only real trade-off? All CD interest is fully taxable at federal, state, and local levels. For investors in high-tax states, this difference can quietly erode returns compared to Treasuries.
Where T-Bills Still Shine
Treasury bills remain the gold standard for ultra-safe investing. Backed by the U.S. government, they carry no credit risk, and their interest enjoys a key advantage: exemption from state and local taxes.
Current yields (as of September 26, 2025):
- 1-month: ~4.10%
- 3-month: ~3.95%
- 6-month: ~3.80%
- 1-year: ~3.70%
- 10-year: ~4.15%
- 30-year: ~4.75%
Notice how short-term T-bills trail the best no-penalty CD rates. Climate First’s 4.34% APY, for example, beats the 3- to 6-month T-bill range by as much as 50 basis points. Yet in states with heavy tax burdens, Treasuries may still come out ahead after adjusting for taxes.
Another overlooked factor: market momentum. Over the past week, nearly every Treasury yield moved higher by 2–10 basis points, despite recent Federal Reserve rate cuts. Longer-dated bonds in particular climbed, reflecting stronger-than-expected GDP growth—revised up to 3.8%—and cooling but persistent inflation. Investors see a resilient economy, and long yields are adjusting accordingly.
For someone looking to ladder maturities or lock in for the medium term, Treasuries offer a level of predictability that even the best CDs can’t quite match.
Liquidity, Safety, and Strategy
Here’s where the decision becomes practical. Both options are liquid compared to tying up money in riskier bonds, but they behave differently:
- No-Penalty CDs: More attractive for short-term savers who may need access to cash. Early withdrawal freedom makes them ideal if you’re cautious about locking money away while rates are still shifting. Promotions and bonuses (like Raisin’s) can enhance returns meaningfully.
- T-Bills: Superior for high-income investors who live in states with steep taxes. The exemption from state and local taxation makes a 3.8% yield stretch further. T-bills also integrate seamlessly into laddering strategies, rolling over automatically at auction if set up properly.
It’s also worth noting: Treasury auctions this coming week include the usual lineup of 4-week to 26-week bills, plus the 52-week. Anticipated yields are hovering in the 3.7%–4.1% range, in line with current market pricing. For anyone using a “blip yield” strategy—jumping in when short-term yields temporarily spike—this could be an opportunity, especially with fiscal uncertainty like a looming government shutdown keeping short-end yields elevated.
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Which Path Is Right for You?
If the priority is squeezing every ounce of yield from cash while staying flexible, no-penalty CDs are delivering a rare edge in 2025. Climate First Bank, Marcus, and Raisin all offer competitive, federally insured rates that beat many short-term T-bills outright.
If the priority is after-tax efficiency and integration into a broader fixed-income strategy, Treasuries remain the stronger anchor. Their exemption from state and local tax means that even slightly lower yields can leave you with more in hand, depending on where you live.
The truth is, this isn’t an all-or-nothing decision. Blending both could create a stronger foundation: no-penalty CDs for liquidity and near-term yield, Treasuries for tax-advantaged stability and long-term laddering. Both serve as a defense against uncertainty and a way to earn respectable returns without moving into riskier territory.
In today’s environment, cash is no longer a dead weight. It’s an active, yield-producing part of the portfolio—if placed wisely. And right now, you have more tools than ever to make sure your cash works as hard as the rest of your investments.
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