I Bonds vs. Treasury Bills vs. CDs: How They Differ

I bonds, Treasury bills and certificates of deposit (CDs) are often grouped together as "safe places for cash," but they work differently. They have different issuers, different ways of paying interest, different limits and different rules for getting out early. This guide lays out the mechanics from TreasuryDirect and FDIC pages so you can see which trade-offs apply to you. It is general education, not a recommendation; ClearValue is a publisher and broker, not a lender, and does not give tax or investment advice.

The short version

| | I bonds | Treasury bills | CDs | |---|---|---|---| | Issuer | U.S. Treasury | U.S. Treasury | A bank or credit union | | How interest works | Fixed rate plus inflation-linked rate, reset every 6 months | Bought at a discount; you receive face value at maturity | Rate and term set by the bank | | Terms | Up to 30 years; cashable after 12 months | 4, 6, 8, 13, 17, 26 and 52 weeks | Set by the bank | | Getting out early | Not before 12 months; lose last 3 months of interest if under 5 years | Can sell before maturity | Per the bank's early-withdrawal terms | | Minimum | $25 | $100 | Set by the bank | | Limit | $10,000 per calendar year (electronic) | $10 million per auction (non-competitive) | Insurance covers at least $250,000 per depositor, per bank, per ownership category | | State income tax | Exempt | Exempt | Generally taxable |

I bonds

According to TreasuryDirect, I bonds are bought electronically through a TreasuryDirect account (paper I bonds are no longer sold as of January 1, 2025). The minimum is $25, and one Social Security number or EIN can buy up to $10,000 in electronic I bonds per calendar year.

The rate has two parts: a fixed rate that never changes for the life of the bond, and a variable rate tied to inflation (CPI-U) that resets every six months from your bond's issue month. Treasury announces new rates each May 1 and November 1. For bonds issued November 2026 through April 2027, TreasuryDirect's rates page lists a 1.40% fixed rate and a 5.51% composite rate (retrieved November 3, 2026); bonds issued May through October 2026 carry a 0.90% fixed rate. Because the composite resets, check the page rather than relying on a number in an article, including this one. Our rate-reset explainer walks through the math.

Timing rules matter most here. You cannot cash an I bond for the first 12 months. If you cash it in under 5 years, you lose the last 3 months of interest. Interest can be earned for up to 30 years. TreasuryDirect says you can choose each year whether to report the earnings or wait until you cash the bond, and that I bonds are exempt from state and local income tax. See our explainer on how CPI is reported for the inflation data behind the variable rate.

Treasury bills

Treasury bills come in terms of 4, 6, 8, 13, 17, 26 and 52 weeks. They are sold at a discount or at par, and you receive face value at maturity; the difference is your interest. Bills with terms of 4 to 26 weeks are auctioned weekly, and the 52-week bill every four weeks. The minimum purchase is $100 in $100 increments, and TreasuryDirect lists a maximum of $10 million per auction for non-competitive bids.

Unlike an I bond, you can hold a bill to maturity or sell it before it matures. Treasury says there are no state or local taxes on bill interest, but federal tax applies. Because bill yields come from auctions, they tend to follow the path of short-term rates; our explainer on how the Federal Reserve sets interest rates covers that link.

Certificates of deposit

A CD is a deposit at a bank or credit union for a set term. The rate, term, minimum and early-withdrawal terms are set by the institution, so read the account disclosure before opening one. The FDIC lists time deposits such as CDs among covered deposits, with insurance of at least $250,000 per depositor, per insured bank, for each ownership category. The FDIC page we reviewed does not address whether early-withdrawal penalties are covered, so treat the penalty as a cost in addition to the insurance protection. For how coverage works in practice, see what FDIC insurance covers if your bank fails, and how to verify a bank is FDIC or NCUA insured. To read a CD's quoted yield correctly, start with APY vs. APR.

Questions that separate the three

• When might you need the money? An I bond is locked for 12 months and costs 3 months of interest under 5 years. A bill can be sold early; a CD follows the bank's terms.
• How large is the amount? The $10,000 annual I bond limit caps its role for bigger balances; bills and insured CDs scale further.
• Where do you live and what is your bracket? State-tax exemption on Treasury interest matters more in states with income taxes. Confirm with a tax professional.
• Do you want a rate that moves with inflation? Only the I bond has an inflation-linked component. Bills and most CDs are priced on rates when you buy.
• Where does the insurance or backing come from? I bonds and bills are Treasury securities; CDs rely on FDIC (or NCUA for credit unions) coverage within limits.

What we did and did not verify

Every mechanic and figure above comes from the TreasuryDirect and FDIC pages linked here, retrieved October 9, 2026 (I bond rates refreshed November 3, 2026). We did not compare current CD or bill yields, which change daily, and this page recommends no product. For cash you want to keep liquid, see HYSA vs. money market account vs. money market fund. Our sourcing standard explains how we handle figures.

The takeaway

I bonds trade liquidity for an inflation-linked rate, bills are short-term, sellable Treasury paper bought at a discount, and CDs are insured bank deposits with terms the bank sets. Match the lockup and limits to when you need the money, then check the live rate on the issuer's own page.