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APR vs APY — Why the Disclosure Matters

Under Regulation Z (Truth in Lending) and Regulation DD (Truth in Savings), US banks must disclose APR (nominal annualized rate, no compounding) on loans and APY (annual percentage yield, includes compounding) on deposits. For deposits, APY is the apples-to-apples number — a 4.40% APR compounded daily is roughly 4.50% APY. Always compare APY across HYSAs, MMFs, CDs, and T-Bills (using bond-equivalent yield) — never compare APR to APY.

Money Market Funds vs HYSAs

A HYSA like Marcus, SoFi, Ally, or Wealthfront is a deposit account at an FDIC-insured bank — protected up to $250,000 per depositor, per insured bank, per ownership category. A money market fund (MMF) like Vanguard VMFXX or Fidelity SPAXX is a mutual fund, not a bank account. MMFs are NOT FDIC-insured, but they invest almost exclusively in T-Bills, government repos, and short-dated agency paper — effectively near-Treasury risk. In 2026 the top MMFs yield about 0.30–0.70 percentage points more than the best HYSAs (5.20% vs 4.50%), which is real money on six-figure balances. For most savers, a hybrid works: HYSA for emergency cash, MMF inside a brokerage for taxable surplus.

CD Ladders: 12/24/36/48/60 Month

The classic ladder splits your CD allocation across five rungs so one rung matures every year, restoring liquidity without forcing you to predict rates. In 2026 the yield curve is mildly inverted on the front end (12-month CDs at 5.00–5.25% vs 60-month at ~4.50%), which makes a barbell (heavy short + heavy long, skip the middle) or a short-focused ladder more attractive than the textbook even ladder. Always compare to brokered CDs on Fidelity or Schwab, which often beat local bank CDs by 30–60 bps and provide a secondary market if you need early liquidity.

Treasury Bills — The State Tax Edge

T-Bills auction weekly at TreasuryDirect.gov (no broker, no commission) at 4-week, 8-week, 13-week, 17-week, 26-week, and 52-week tenors. Current yields: ~5.30% (4-wk), ~5.20% (13-wk), ~5.10% (26-wk). The crucial advantage: interest is exempt from state and local income tax. For a California resident in the 9.3% bracket, a 5.10% T-Bill is equivalent to a 5.62% HYSA on a pre-tax basis. New York City residents (combined ~10.9% state+city) get even more benefit. Vanguard, Fidelity, and Schwab also let you buy T-Bills at auction or in the secondary market with zero commission.

Series I Bonds — Inflation-Linked

I-Bonds (TreasuryDirect.gov) blend a fixed real rate with a semiannual inflation adjustment. The Nov 2025–Apr 2026 composite is ~4.28%. Limits: $10,000 per Social Security Number per calendar year (plus $5,000 via tax refund). Constraints: must hold 1 year minimum; if redeemed before 5 years, you forfeit the last 3 months of interest. Interest is federal-only (no state tax) and deferred until redemption — and if used for qualified higher-education expenses subject to AGI limits, it can be federal-tax-free too.

Money Market Account (MMA) vs HYSA

Don't confuse a money market account (MMA, FDIC-insured bank product with optional check-writing) with a money market fund (MMF, brokerage mutual fund). MMAs typically pay slightly less than the best online HYSAs but add check-writing or debit-card access. For pure yield, an online HYSA wins.

Brokered CDs vs Bank CDs

Fidelity, Schwab, and Vanguard offer brokered CDs aggregating 200+ banks on one platform. Advantages: usually 20–60 bps higher than local bank CDs, FDIC-insured up to $250k per issuing bank (you can stack across multiple issuers in one brokerage account for jumbo coverage), and a secondary market if you need early liquidity (subject to price risk — not a guaranteed return of principal like a bank CD penalty).

Tax Implications by Account Type

The Cost of Inertia

Most Americans don't move their savings. Bank of America, Chase, and Wells Fargo collectively hold trillions in 0.01% APY deposits — a stunning quantity of unrealized yield. The behavioral finance term is inertia or status quo bias. At 5% spreads, $20,000 of inertia costs $1,000/year. $50,000 costs $2,500/year. That's not a rate-of-return calculation — that's a free dinner, every week, that you're not eating.

When Arbitrage is NOT Worth It

Important Disclaimers

Rates change weekly. APYs quoted are accurate to late spring 2026 but verify directly on each provider's site before transferring. FDIC and SIPC limits apply at the institution level — if you hold more than $250k at one bank, consider splitting across multiple insured institutions. This calculator is not investment advice; for tax-sensitive decisions (Roth conversions, I-Bond strategy, jumbo CD ladders), consult a CFP or CPA.