There's a number on your bank statement almost nobody looks at, and it's 0.44%. That's the national average annual yield on a money-market account. A 13-week Treasury bill auctioned Thursday at 3.80%. A 26-week bill went at 3.89%. Same money, same overnight peace of mind, about eight times the income.
The gap, in dollars
Percentages are easy to nod at and hard to feel, so run the arithmetic. The difference between 0.44% and 3.80% is 3.36 percentage points. On $50,000 of cash sitting still, that's roughly $1,680 a year. On $200,000, it's closer to $6,700. Nobody is getting rich on Treasury bills, and that is not the point. The point is that this is one of the very few gaps in personal finance that costs nothing to close and requires no opinion about inflation, the Fed or anything else.
The five-year CD deserves its own paragraph, because it's the trap that looks like the solution. The national average pays 1.75%. That's a five-year commitment to earn less than a 13-week government bill pays today, and most of them charge a penalty if you need the money early. The federal-funds target is 3.50% to 3.75%, and short government paper tracks it closely. Bank deposit rates don't have to follow, and by and large they haven't.
Why the money stays put
Inertia, mostly, plus the reasonable instinct that anything paying more must be hiding something. Short Treasury bills are about as close to boring as finance gets — government-backed, maturing in weeks, priced every day. The real catches are different ones: the income is taxable, the rate resets whenever policy resets, and bills pay nothing extra for tying money up. That is a feature for an emergency fund and a limitation for a long-dated goal. On the other side of the ledger, borrowing is expensive too — the average 30-year fixed mortgage sits at 6.83%, near its 52-week high.
This is the least glamorous item in the whole edition and quite possibly the most valuable one. Pull up whichever account holds the cash cushion, find the yield it actually pays — the one on the statement, not the one on the marketing page — and hold it next to 3.80%. If the difference is a surprise, that is a fifteen-minute fix and a very good reason to talk it through.