Interest Rate Checkup – Online, Brick and Mortar, and Treasury Bills

Here is brief roundup of the top rates for short-term cash accounts with moderate balances.

Online Savings Accounts, No Minimum Balance
HSBC Direct continues it’s 6.0% APY rate on new money until April 30th, and you can open with $1. The highest non-promo rate is from Amtrust Direct at 5.36% APY, although you must open with $1,000. Overall, rates seem to be stable as of late.

Nationwide Brick and Mortar Accounts, No Minimum Balance
Washington Mutual continues to top this area, with their WaMu 5.0% APY Saving Account. You have to open online, but after that it has all the advantages of a local branch savings account; You can transfer instantly to/from their Free Checking account, deposit directly into savings via ATMs or tellers, and take cash directly out via ATMs.

28-Day Treasury Bills Possibly Good Alternative
If you are subject to state income taxes and have cash reserves that you don’t need immediate access to, you should definitely look into Treasury Bills. Rates change weekly, with the most recent auction results showing a 5.267% investment rate. Using my 28-Day T-Bill APR-to-APY calculator with my new Tax Equivalent Yield Calculator, along with an assumed 25% federal/9% state tax bracket, that is the equivalent of a taxable interest rate of 6.12% APY. Treasury Bills are backed by the full faith of the government, and also come in 3-month and 6-month terms.

The downsides to T-Bills include the fact that you will give up some liquidity and they must be bought in $1,000 increments. For more information on how to buy them online and building a T-Bill ladder, please read the posts in my Treasury Bill category archives. Look for a new visual how-to guide coming soon.

Personally, I continue to purchase T-Bills with a portion of my cash balances as I live in Oregon with a 9% state rate. It is actually very easy to have to money transferred to and from your existing high-yield bank account. For example, if you have $30,000 sitting in a bank, you might commit $20,000 to Treasury Bills and keep the rest 100% liquid. It all depends on what you feel comfortable with.

Also see: Rate Chaser Calculator.


  1. Actually you do pay fed taxes for interest on T Bills, but no state taxes. So your effective yield is actually much lower than 6.12%. Municipal bonds fed tax exempt.

  2. The 6.12% does take into account being only exempt from state taxes. If it were also exempt from federal taxes, the equivalent APY would be north of 8%.

  3. hayhehes says:

    I put in those same numbers into your tax equivalent yield calculator and got a tax equivalent rate of 5.985% what gives?

    I marked 5.267% interest rate, 25% federal, 9% state, 0% local, exempt from state, exempt from local, and no itemizing.

  4. 5.985% gives you APR, not APY.

    APY allows you to compare the effects of compounding schedules from different accounts. It’s also the higher number, which is why banks advertise using it. For example, HSBC’s rate of 6.0% is APY, not APR.

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