When it comes to saving money securely in 2023, two popular options often come up: treasury bonds and savings accounts. Both are low-risk places to park your money—but which one makes more sense for you this year?
Each serves a different purpose and offers different benefits. Understanding the trade-offs can help you make smarter decisions with your cash.
Understanding Treasury Bonds
Treasury bonds are long-term debt securities issued by the U.S. government. When you buy one, you’re essentially lending money to the government in exchange for regular interest payments and full principal repayment at maturity.
They’re considered one of the safest investments available, backed by the full faith and credit of the U.S. government.
In 2023, treasury bond yields are higher than they’ve been in recent years, with many 10-year bonds offering returns above 4%. That makes them more attractive to conservative investors seeking predictable income.
What Are Savings Accounts?
Savings accounts are deposit accounts offered by banks or credit unions. Your money stays accessible, earns interest, and is insured up to $250,000 by the FDIC (in the U.S.).
In 2023, high-yield savings accounts offer interest rates between 3.5% and 4.5%—a massive increase compared to just a few years ago. That makes them a competitive short-term savings tool for emergency funds, upcoming purchases, and general cash management.
Interest Rates: Which Pays More?
At first glance, the interest rates on both products may appear similar. Some savings accounts are offering up to 4.5%, while certain U.S. treasury bonds are yielding around 4.2%.
The key difference is that savings account rates can fluctuate. Banks may change them at any time based on the Federal Reserve’s policy changes. Treasury bond rates, however, are fixed once you buy the bond.
So, if interest rates fall, your savings account could earn less over time. With a treasury bond, you lock in your rate for the term you choose—offering certainty in a volatile market.
Liquidity and Access to Funds
One major difference is liquidity. Savings accounts give you instant access to your money. You can transfer funds anytime, pay bills, or withdraw cash without penalties.
Treasury bonds are not as liquid. If you want to sell before maturity, you’ll need to go through the secondary market and may receive less than your original investment if interest rates have risen.
If you might need your money within the next few months, a savings account is better suited. If you can leave the money untouched for several years, treasury bonds may pay off more reliably.
Tax Considerations
Interest from savings accounts is considered taxable income by both federal and state governments.
Interest from treasury bonds, on the other hand, is subject to federal tax but exempt from state and local taxes. If you live in a high-tax state, this difference can make bonds slightly more tax-efficient.
Risk Profile
Both treasury bonds and savings accounts are extremely low risk. However, they’re not risk-free.
The main risk with savings accounts is inflation. If inflation outpaces your interest rate, your purchasing power shrinks.
With treasury bonds, the biggest risk is interest rate risk. If you lock in a 4% bond and rates later jump to 6%, your bond becomes less valuable on the open market if you need to sell early.
Still, both are far safer than stock market investments and are ideal for capital preservation.
Ideal Use Cases for Savings Accounts
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Emergency funds
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Short-term savings (vacation, new phone, repairs)
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Frequent transfers or withdrawals
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A secure parking place for idle cash
Ideal Use Cases for Treasury Bonds
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Long-term savings goals (5–30 years)
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Income generation through interest
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Diversifying a portfolio with fixed-income assets
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Tax-efficient investing for high-income earners
Which Is Better in 2023?
There’s no one-size-fits-all answer. It depends on your time horizon, risk tolerance, and financial goals.
If you want instant access and flexibility, savings accounts are a great option—especially if you’re building an emergency fund or saving for short-term goals.
If you have excess cash you don’t need for at least a year or more, treasury bonds may provide better predictability and tax benefits.
Some investors choose both: they keep a savings account for flexibility and invest in bonds for growth and income.
How to Buy Treasury Bonds
You can purchase treasury bonds directly from the U.S. government via TreasuryDirect.gov, or through a brokerage account. Options include:
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T-Bills (short-term, under 1 year)
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T-Notes (2–10 years)
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T-Bonds (20–30 years)
You receive fixed interest every six months, and full repayment at maturity.
How to Maximize Your Savings Account in 2023
Choose a high-yield online savings account with a competitive rate and no monthly fees. Some of the best options come from:
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Ally Bank
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Marcus by Goldman Sachs
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Discover Online Savings
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SoFi
Link your checking account for easy transfers and set up automatic deposits to build your savings over time.
Final Thoughts
In 2023, both treasury bonds and high-yield savings accounts offer strong returns compared to previous years. The best choice depends on how soon you’ll need the money and how much certainty you want.
Savings accounts win on accessibility. Treasury bonds win on fixed income and long-term reliability.
You don’t need to choose just one. A balanced approach—using each tool for its strengths—might be the smartest move of all.