In this article, we summarize the pros and cons between CDs and Treasuries for fixed-income investors. Key Differences Between Certificates of Deposit (CDs) and Treasuries Factor CDs Treasuries Security – FDIC-insured up to $250,000 per depositor per bank. + Backed by the full faith and credit of the U.S. government, Treasuries are considered among the safest investments, with security that surpasses even FDIC insurance. – Limited insurance coverage for amounts above $250,000 at each bank. + No limit to the amount of protection. Yield + Generally higher yields for maturities of 1 year or longer. – Typically lower yields for maturities over 1 year. – Lower yields for shorter maturities compared to Treasuries. + Higher yields for short-term maturities (less than 1 year). Note: this could possibly change so double check yields before purchase. Taxes – Subject to both federal and state income taxes. + Exempt from state income taxes. – State tax impact can reduce effective yield, especially in high-tax states. + More tax-efficient, especially in high-tax states. Maturities – Limited availability for maturities beyond 5 years. + Wide range of maturities (4 weeks to 30 years). – Flexibility can be restricted depending on the bank’s capital needs and availability of brokered CDs in a brokerage like Schwab or Fidelity. + Extensive maturity options between 2023–2053. Liquidity – Less liquid, may involve fees or uncertainty of receiving original principal if sold early. + More liquid, with an active secondary market for easy resale. – Brokered CDs can be sold in secondary markets but may involve a fee. + Easier to sell with tighter bid/ask spreads. Strategy Considerations – Fewer maturity options for building a maturity CD ladder. + Easier to build a flexible bond ladder portfolio. Convenience + Banks often promote CDs with lower yields. –  Has to rely on Brokerage to purchase/sell Treasuries most times Detailed Tax Impact Comparison: State Tax Impact CDs Treasuries For High-Tax States – State income taxes can reduce yield significantly (e.g., California, New York). + State income tax exemption offers a clear tax benefit. Example – In California, a 3-year CD yielding 3.90% after state taxes drops to 3.38%. + A 3-year Treasury yielding 3.51% remains unaffected by state taxes. Breakeven Tax Rate – For a CD to equal a Treasury’s yield, a state tax rate of ~10% or more may be required. + More tax-efficient for investors in high-tax states. Conclusion In summary: