Updated for 2026: This post was originally published in 2022. For the latest rates and a comprehensive guide, see Where to Park Your Cash: T-Bills, HYSA & More for Expats (2026).
Back in November 2022, the US Fed had pushed the federal funds rate up to 3.75%-4% as it fought inflation. If you have idle cash sitting in a normal savings account, it is still worth looking at a high yield saving account (HYSA) or buying US Treasury Bills. Why?
Earn an interest rate of about 4%
This is the latest results from the US treasury regarding the treasury bill interest rate. Let's take the shortest duration (4 week treasury bill) as example, the most recent issue (as of October 2026) has a yield of 3.94%. In simple terms, by lending money to the US government for 4 weeks, you earn an interest of about 3.94%/year. This is almost risk free because basically it is backed by the US government, directly from the US Treasury. For every $10,000, you earn about $394/year in interest :) When I first discovered this, I couldn't believe I had been leaving money in a regular savings account earning close to nothing.
Where yields are today (October 2026)
Rates have moved a lot since I first wrote this. As of October 2026, the 4-week treasury bill yields about 3.94%, while the 13-week, 26-week and 52-week bills yield about 4.15%, 4.29% and 4.42%. I wrote an updated article about this here.
Interest earned is exempt from all state and local income taxes.
Yeah, you see it right. Unless like your salary, you don't need to pay state or local income tax for interest earned from treasury bills. You still need to pay federal income tax for this. More information about this here, on the IRS website.
How do I buy Treasury bills?
There are a number of ways you can do this like buying direct from the US Treasury or through a broker. If you want to buy direct from the US Treasury, you can sign up an account on the Treasury Direct website and then proceed from there.
One thing I like about buying from Treasury Direct is that there is a reinvestment function. This is neat because I care mostly about the 4 week bill and I hate having to repeat the same process every 4 week. Read more about the schedule reinvestments here. With this function, I can set up the purchase once and then after 4 week, the system automatically reinvest for me.
Treasury bills are sold at a discount from their face value
What this means is that if you buy $1000 Treasury Bill at 4% interest rate, 4 week duration, you will only pay perhaps $997. Upon maturity, the Treasury will send you back $1000. The difference between $1000 and $997 is your interest earned.
The math is: 4% x $1000 = $40. This is per year, or 52 weeks. So 4 week period is about $3.
Treasury bills are sold through competitive bidding at auctions held by the U.S. Treasury
Simply put, the actual interest depends on supply and demand. Two auctions held a week apart can price a few basis points differently.
If your capital base is very small, the difference between one auction and the next is negligible.
Treasury bill can be sold prior to maturity
Read more here, from Treasury Direct website. As a rule of thumb, I always try to "test the pipe" to ensure that everything is working fine before committing a large amount of cash. You need to try the process to understand how long it takes for you to sell and how soon the sales proceed will be sent back to your account.
If you buy from Treasury Direct, take note of the below:
"In Treasury Direct, when you buy a Treasury marketable security, you must hold it in your TreasuryDirect account for 45 days before selling or transferring it. This means you can’t sell or transfer a 4-week bill from TreasuryDirect because it matures in less than 45 days. This hold also applies to a reinvestment when new funds are added to pay for the new security."
What's the catch?
At the time, the Fed was signalling that it would keep raising rates to fight inflation in the US — from the then-current 3.75%–4% range toward a level it considered appropriate. So that means if you buy a longer term Treasury Bill (like 26 weeks) or Treasury bond (like 5 years or longer), when the federal fund rate increases, the value of your treasury bill or bond will decrease. That is how the math works so that it can yield a higher interest rate. Hence, for the moment, I care mostly about some of the shortest duration when it comes to Treasury Bills.
In conclusion
With little effort, if you have idle cash and you want a very liquid and almost risk free return, consider buying US Treasury bills. There is tax advantage for this option too so that is a big plus :) Of course, as always do careful research before committing any amount of money. Test the pipe i.e. going through the entire process of buying and then selling or reinvesting with a small amount of money before committing a large amount of money. I cannot stress this enough -- I always test with a small amount first before moving significant cash.
That's it from me. Have you tried buying T-bills yet? What has your experience been with Treasury Direct? I'd love to hear from fellow expats who are exploring this.
Cheers,
Chandler
P.S. I recently created a group on Facebook called Asian Expats in the US so that we can share/discuss more tips directly. Feel free to join.
Disclaimer: This is educational content, not advice. Nothing here is financial, investment, credit, tax, insurance, healthcare or legal advice, and nothing here is a recommendation to open, buy or use any product or account. Rates, limits, rules, fees and offers change frequently, and I am not a licensed adviser in any of these fields. Do your own research, verify the current figures and terms with the provider or the relevant authority (such as the IRS), and speak to a qualified professional before you act on anything you read here. Your circumstances may differ from the examples in this post.