Money Management

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Retirement is supposed to be about relaxation and enjoying the rewards of your hard work. But before you kick back, there’s one thing you can’t ignore: taxes. Understanding how your retirement income is taxed can help you keep more of your money and avoid any unwelcome surprises.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. Here’s what you need to know before filing your taxes this year.1. Your various income streams are taxed differentlyDuring your working years, you likely had a paycheck that was taxed at a predictable rate. In retirement, things get a little more complicated. Your income may come from multiple sources, each with its own tax rules.Social Security benefits: If your combined income exceeds $25,000 for single filers, you’ll owe taxes on part of your benefits. If you’re filing jointly, add half of your Social Security payment and half of your spouse’s to the rest of your total income. You’ll be paying taxes if that number exceeds $32,000.Traditional 401(k) and IRA withdrawals: Distributions from these accounts are taxed as ordinary income. If you’re over 59 1/2 or older, you can withdraw funds without penalties, but you’ll still owe income tax.Roth 401(k) and Roth IRA withdrawals: These accounts offer tax-free withdrawals in retirement, as long as you’ve held them for at least five years.Pensions and annuities: Generally, these are taxed as regular income, but some payments might include a tax-free portion if you contributed after-tax dollars.Investment income: Capital gains and dividends are taxed if the investments are not held in a tax-advantaged retirement account. The rate varies depending on your income and how long you’ve held the investment. Capital gains taxes are lower if you’ve held the investment for over a year.2. Required minimum distributions (RMDs) can’t be ignoredIf you have a traditional 401(k) or IRA, the IRS requires you to start taking required minimum distributions (RMDs) once you reach age 73. These withdrawals are taxed at your regular income rate, and failing to take them on time can result in hefty penalties — up to 25% of the amount you were supposed to withdraw.If you don’t need the money, consider reinvesting your RMD into a tax-advantaged brokerage account like a Roth IRA or using a qualified charitable distribution (QCD) to donate up to $100,000 tax free to a qualified charity.3. State taxes matter more than you thinkFederal taxes are just one part of the equation, and state taxes can also take a bite out of your retirement income. Some states, like Florida and Texas, don’t tax income at all. Others, like California and New York, impose high state income taxes.Before you relocate in retirement, research how your new state will tax Social Security, pensions, and other income sources.4. Medicare premiums can be higher if your income is too highIf your income is above a certain threshold, you may have to pay higher Medicare Part B and Part D premiums. The extra-large medicare premiums apply to retirees with a modified adjusted gross income (MAGI) above $106,000 (single filers) or $212,000 (joint filers). Planning withdrawals strategically can help keep your income below these limits and avoid extra costs.This is not a tax in the traditional sense, but it sure feels like one. With a little planning you can keep more of your cash.5. Tax breaks for retirees can save you moneyThe good news is there are several tax breaks designed to help retirees:Higher standard deduction: If you’re 65 or older, you qualify for a higher standard deduction, reducing your taxable income.Medical expense deductions: If your medical expenses exceed 7.5% of your adjusted gross income, you can deduct them on your tax return.Senior tax credits: Some retirees qualify for the Credit for the Elderly or the Disabled, which can reduce tax liability.All the available tax breaks for you can be hard to identify on your own. Click this link to see all the tax software we’ve reviewed and find a match for your tax-filing needs.How to lower your tax burden in retirementNo one likes paying more taxes than necessary. Here are some steps you can take to keep more of your retirement income:Strategically withdraw from accounts: Mixing taxable, tax-deferred, and tax-free withdrawals can help you smooth out your tax costs from year to year.Consider Roth conversions: Converting traditional IRA or 401(k) funds to a Roth IRA in lower-income years can help you reduce taxes in the future. But you will have to pay income tax upon conversion.Take advantage of tax-loss harvesting: If you have investments in taxable accounts, selling losing investments can offset gains and reduce taxable income.Don’t wait until the last minuteTax planning in retirement isn’t a one-time event — it needs to be an ongoing strategy. If you’re unsure about the best approach, consider working with a tax professional who specializes in retirement taxes, or exploring some of the best online tax software available.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

Retirement is supposed to be about relaxation and enjoying the rewards of your hard work. But before you kick back, there’s one thing you can’t ignore: taxes. Understanding how your retirement income is taxed can help you keep more of your money and avoid any unwelcome surprises.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

Here’s what you need to know before filing your taxes this year.

1. Your various income streams are taxed differently

During your working years, you likely had a paycheck that was taxed at a predictable rate. In retirement, things get a little more complicated. Your income may come from multiple sources, each with its own tax rules.

• Social Security benefits: If your combined income exceeds $25,000 for single filers, you’ll owe taxes on part of your benefits. If you’re filing jointly, add half of your Social Security payment and half of your spouse’s to the rest of your total income. You’ll be paying taxes if that number exceeds $32,000.
• Traditional 401(k) and IRA withdrawals: Distributions from these accounts are taxed as ordinary income. If you’re over 59 1/2 or older, you can withdraw funds without penalties, but you’ll still owe income tax.
• Roth 401(k) and Roth IRA withdrawals: These accounts offer tax-free withdrawals in retirement, as long as you’ve held them for at least five years.
• Pensions and annuities: Generally, these are taxed as regular income, but some payments might include a tax-free portion if you contributed after-tax dollars.
• Investment income: Capital gains and dividends are taxed if the investments are not held in a tax-advantaged retirement account. The rate varies depending on your income and how long you’ve held the investment. Capital gains taxes are lower if you’ve held the investment for over a year.

2. Required minimum distributions (RMDs) can’t be ignored

If you have a traditional 401(k) or IRA, the IRS requires you to start taking required minimum distributions (RMDs) once you reach age 73. These withdrawals are taxed at your regular income rate, and failing to take them on time can result in hefty penalties — up to 25% of the amount you were supposed to withdraw.

If you don’t need the money, consider reinvesting your RMD into a tax-advantaged brokerage account like a Roth IRA or using a qualified charitable distribution (QCD) to donate up to $100,000 tax free to a qualified charity.

3. State taxes matter more than you think

Federal taxes are just one part of the equation, and state taxes can also take a bite out of your retirement income. Some states, like Florida and Texas, don’t tax income at all. Others, like California and New York, impose high state income taxes.

Before you relocate in retirement, research how your new state will tax Social Security, pensions, and other income sources.

4. Medicare premiums can be higher if your income is too high

If your income is above a certain threshold, you may have to pay higher Medicare Part B and Part D premiums. The extra-large medicare premiums apply to retirees with a modified adjusted gross income (MAGI) above $106,000 (single filers) or $212,000 (joint filers). Planning withdrawals strategically can help keep your income below these limits and avoid extra costs.

This is not a tax in the traditional sense, but it sure feels like one. With a little planning you can keep more of your cash.

5. Tax breaks for retirees can save you money

The good news is there are several tax breaks designed to help retirees:

• Higher standard deduction: If you’re 65 or older, you qualify for a higher standard deduction, reducing your taxable income.
• Medical expense deductions: If your medical expenses exceed 7.5% of your adjusted gross income, you can deduct them on your tax return.
• Senior tax credits: Some retirees qualify for the Credit for the Elderly or the Disabled, which can reduce tax liability.

How to lower your tax burden in retirement

No one likes paying more taxes than necessary. Here are some steps you can take to keep more of your retirement income:

• Strategically withdraw from accounts: Mixing taxable, tax-deferred, and tax-free withdrawals can help you smooth out your tax costs from year to year.
• Consider Roth conversions: Converting traditional IRA or 401(k) funds to a Roth IRA in lower-income years can help you reduce taxes in the future. But you will have to pay income tax upon conversion.
• Take advantage of tax-loss harvesting: If you have investments in taxable accounts, selling losing investments can offset gains and reduce taxable income.

Don’t wait until the last minute

Tax planning in retirement isn’t a one-time event — it needs to be an ongoing strategy. If you’re unsure about the best approach, consider working with a tax professional who specializes in retirement taxes, or exploring some of the best online tax software available.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Certificates of deposit (CDs) allow you to grow your savings with little to no risk. They offer guaranteed returns, and they’re FDIC insured up to $250,000 per bank, per depositor.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. But while CDs are simple investments, they aren’t foolproof. If you’re not careful, you could make costly mistakes that reduce your earnings or lock your money away when you need it most.Here are three of the biggest mistakes you can make when investing in CDs — and how to avoid them.1. Locking in a CD without shopping aroundOne of the worst mistakes you can make is settling for the first CD you come across. Some banks offer much higher interest rates than others.Let’s say you want to invest $5,000 in a 5-year CD.If you choose a CD with a 1.31% APY (the national average), you’ll earn about $336.If you choose a CD with a 4.00% APY, your earnings jump to $1,083.You’d earn three times the interest just by selecting a higher-yield CD. And the more you invest, the more you stand to gain from a higher APY.How to avoid this mistake:Compare CD rates from multiple banks before making a decision.Consider online banks, which often offer higher rates than brick-and-mortar banks.Check for promotional CDs, which may offer better rates for a limited time.2. Choosing the wrong CD termAnother potential big mistake is picking a CD term that doesn’t work for you. If you withdraw your funds before the CD’s maturity date, you’ll likely face an early withdrawal penalty, which can reduce or even wipe out your earnings.For instance, if you invest in a 5-year CD but suddenly need the money in two years, you may have to pay a penalty equivalent to six months’ or even a full year’s worth of interest.Some banks offer CDs called “no-penalty CDs” with no early withdrawal penalty, but these tend to have lower APYs.How to avoid this mistake:Choose a CD term based on when you’ll need access to the money.If you’re unsure, consider a short-term CD or a CD-laddering strategy. That way you’ll be able to access at least some of your money as soon as three months.Want to earn an APY of over 4.00% and withdraw money whenever you want? Check out our list of the best high-yield savings accounts to open a new account today.3. Not watching out for the CD maturity dateWhen your CD matures, you have some options when it comes to what happens next.Namely, you can:Withdraw your original deposit plus the earningsRoll the funds over into a new CD with the same term (also known as “renewing”)Invest the funds in a different CDYou generally have seven to 10 days after the CD’s maturity date to make a decision; this is the “grace period.” If you don’t take action, your bank may automatically reinvest your money in a new CD with the same term — but potentially a different interest rate.Most banks will notify you when a CD is maturing soon (and in some cases, they’re required by law to do so). But it’s best not to assume that you’ll get a heads up.How to avoid this mistake:Find out in advance what your bank will do if you leave your CD funds untouched past the grace period.Mark your calendar or set a reminder for your CD’s maturity date.When the time comes, check out the CD rates offered by your current bank and other banks. Then you can decide whether it’s best to renew, invest elsewhere, or cash out.How to open a CD the right wayOpening a CD is a straightforward process, and it’s easy to avoid the pitfalls. Here’s a simple step-by-step guide:Compare rates: Look at multiple banks and credit unions to find the best interest rates.Choose the right term: Select a CD term that aligns with your financial needs.Decide how much to invest: Make sure you keep some savings accessible for emergencies.Open the CD: It’s easiest to do this online or through the bank’s mobile app. Some banks require a minimum deposit, so check the terms before opening an account.Keep track of interest rates: If rates rise significantly, you may want to reinvest when your CD matures.Don’t miss the maturity date: When your CD matures, you want to have control over what happens with your money next.Ready to open a CD and start earning an APY of 4.00% or more? Check out our list of the best CD rates to get started.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

Certificates of deposit (CDs) allow you to grow your savings with little to no risk. They offer guaranteed returns, and they’re FDIC insured up to $250,000 per bank, per depositor.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

But while CDs are simple investments, they aren’t foolproof. If you’re not careful, you could make costly mistakes that reduce your earnings or lock your money away when you need it most.

Here are three of the biggest mistakes you can make when investing in CDs — and how to avoid them.

1. Locking in a CD without shopping around

One of the worst mistakes you can make is settling for the first CD you come across. Some banks offer much higher interest rates than others.

Let’s say you want to invest $5,000 in a 5-year CD.

• If you choose a CD with a 1.31% APY (the national average), you’ll earn about $336.
• If you choose a CD with a 4.00% APY, your earnings jump to $1,083.

You’d earn three times the interest just by selecting a higher-yield CD. And the more you invest, the more you stand to gain from a higher APY.

How to avoid this mistake:

• Compare CD rates from multiple banks before making a decision.
• Consider online banks, which often offer higher rates than brick-and-mortar banks.
• Check for promotional CDs, which may offer better rates for a limited time.

2. Choosing the wrong CD term

Another potential big mistake is picking a CD term that doesn’t work for you. If you withdraw your funds before the CD’s maturity date, you’ll likely face an early withdrawal penalty, which can reduce or even wipe out your earnings.

For instance, if you invest in a 5-year CD but suddenly need the money in two years, you may have to pay a penalty equivalent to six months’ or even a full year’s worth of interest.

Some banks offer CDs called “no-penalty CDs” with no early withdrawal penalty, but these tend to have lower APYs.

How to avoid this mistake:

• Choose a CD term based on when you’ll need access to the money.
• If you’re unsure, consider a short-term CD or a CD-laddering strategy. That way you’ll be able to access at least some of your money as soon as three months.

Want to earn an APY of over 4.00% and withdraw money whenever you want? Check out our list of the best high-yield savings accounts to open a new account today.

3. Not watching out for the CD maturity date

When your CD matures, you have some options when it comes to what happens next.

Namely, you can:

• Withdraw your original deposit plus the earnings
• Roll the funds over into a new CD with the same term (also known as “renewing”)
• Invest the funds in a different CD

You generally have seven to 10 days after the CD’s maturity date to make a decision; this is the “grace period.” If you don’t take action, your bank may automatically reinvest your money in a new CD with the same term — but potentially a different interest rate.

Most banks will notify you when a CD is maturing soon (and in some cases, they’re required by law to do so). But it’s best not to assume that you’ll get a heads up.

How to avoid this mistake:

• Find out in advance what your bank will do if you leave your CD funds untouched past the grace period.
• Mark your calendar or set a reminder for your CD’s maturity date.
• When the time comes, check out the CD rates offered by your current bank and other banks. Then you can decide whether it’s best to renew, invest elsewhere, or cash out.

How to open a CD the right way

Opening a CD is a straightforward process, and it’s easy to avoid the pitfalls. Here’s a simple step-by-step guide:

1. Compare rates: Look at multiple banks and credit unions to find the best interest rates.
2. Choose the right term: Select a CD term that aligns with your financial needs.
3. Decide how much to invest: Make sure you keep some savings accessible for emergencies.
4. Open the CD: It’s easiest to do this online or through the bank’s mobile app. Some banks require a minimum deposit, so check the terms before opening an account.
5. Keep track of interest rates: If rates rise significantly, you may want to reinvest when your CD matures.
6. Don’t miss the maturity date: When your CD matures, you want to have control over what happens with your money next.

Ready to open a CD and start earning an APY of 4.00% or more? Check out our list of the best CD rates to get started.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Travel credit cards can unlock amazing perks like free flights, hotel stays, and VIP airport lounge access. With so many options available, it’s important to understand what you’re signing up for before you hit “apply.”Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. Here are six essential things you need to know before applying for a new travel credit card.1. Know your travel habitsBefore choosing a travel credit card, consider how you travel. Are you loyal to largely one airline or hotel chain? Or do you prefer flexibility with your travel options? Some cards are cobranded with specific airlines or hotels, while others offer general travel points that can be redeemed across multiple airlines or hotels.Pro tip: If you value flexibility, a general travel rewards card might be your best bet.2. Understand annual feesMany travel credit cards come with annual fees — some exceeding $500. While this may sound steep, premium cards often come with perks like travel credits, airport lounge access, free checked bags, and elite status at hotels and airlines.If you don’t travel frequently, a travel card with a low or no annual fee is going to be a better fit.3. Check the sign-up bonus requirementsTravel cards often lure new customers with attractive sign-up bonuses, but they usually come with spending requirements. For example, you might need to spend $4,000 in the first three months to earn the bonus.Make sure the spending threshold aligns with your budget so you can earn the bonus without spending more than you ought to.Pro tip: Time your credit card application with a big expense you’re already planning to make. That way you can earn the bonus with no problem.4. Look for valuable travel perksPremium travel credit cards often offer benefits like:Free checked bagsPriority boardingTravel insuranceAirport lounge accessIf you’ll use these perks regularly, they can more than make up for a high annual fee.Finally go on that trip you’ve been putting off. Explore our list of top travel rewards credit cards now.5. Review reward redemption optionsNot all credit card points are created equal. Some travel rewards can be redeemed for flights, hotels, or rental cars, while others may limit you to specific travel partners.Choose a card that offers flexible redemption options or transfers points to multiple travel partners for maximum value.6. Check for travel insurance and protectionsMany travel credit cards offer built-in protections such as:Trip cancellation insuranceLost luggage reimbursementEmergency evacuation coverageThese perks can save you money and stress in the event of unexpected travel disruptions.What are you waiting for?The right travel credit card can turn your everyday spending into unforgettable vacations. By understanding your travel habits, evaluating fees, and focusing on valuable perks, you can find a card that truly complements your lifestyle.Ready to find the perfect travel credit card? Compare top travel cards now and start earning rewards for your next adventure.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

Travel credit cards can unlock amazing perks like free flights, hotel stays, and VIP airport lounge access. With so many options available, it’s important to understand what you’re signing up for before you hit “apply.”

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

Here are six essential things you need to know before applying for a new travel credit card.

1. Know your travel habits

Before choosing a travel credit card, consider how you travel. Are you loyal to largely one airline or hotel chain? Or do you prefer flexibility with your travel options? Some cards are cobranded with specific airlines or hotels, while others offer general travel points that can be redeemed across multiple airlines or hotels.

Pro tip: If you value flexibility, a general travel rewards card might be your best bet.

2. Understand annual fees

Many travel credit cards come with annual fees — some exceeding $500. While this may sound steep, premium cards often come with perks like travel credits, airport lounge access, free checked bags, and elite status at hotels and airlines.

If you don’t travel frequently, a travel card with a low or no annual fee is going to be a better fit.

3. Check the sign-up bonus requirements

Travel cards often lure new customers with attractive sign-up bonuses, but they usually come with spending requirements. For example, you might need to spend $4,000 in the first three months to earn the bonus.

Make sure the spending threshold aligns with your budget so you can earn the bonus without spending more than you ought to.

Pro tip: Time your credit card application with a big expense you’re already planning to make. That way you can earn the bonus with no problem.

4. Look for valuable travel perks

Premium travel credit cards often offer benefits like:

• Free checked bags
• Priority boarding
• Travel insurance
• Airport lounge access

If you’ll use these perks regularly, they can more than make up for a high annual fee.

Finally go on that trip you’ve been putting off. Explore our list of top travel rewards credit cards now.

5. Review reward redemption options

Not all credit card points are created equal. Some travel rewards can be redeemed for flights, hotels, or rental cars, while others may limit you to specific travel partners.

Choose a card that offers flexible redemption options or transfers points to multiple travel partners for maximum value.

6. Check for travel insurance and protections

Many travel credit cards offer built-in protections such as:

• Trip cancellation insurance
• Lost luggage reimbursement
• Emergency evacuation coverage

These perks can save you money and stress in the event of unexpected travel disruptions.

What are you waiting for?

The right travel credit card can turn your everyday spending into unforgettable vacations. By understanding your travel habits, evaluating fees, and focusing on valuable perks, you can find a card that truly complements your lifestyle.

Ready to find the perfect travel credit card? Compare top travel cards now and start earning rewards for your next adventure.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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If you’re looking for a safe place to park your cash, certificates of deposit (CDs) and Treasury bills (T-bills) are two solid options. Both offer decent yields with practically zero risk, but they work in different ways.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. So, which one is the better choice right now? Let’s look at the pros and cons of each.How long does your money stay locked in?CDs and T-bills both have fixed terms, but they offer different levels of flexibility.CDs: Terms typically range from 3 months to 5 years (although it’s possible to find terms that are both shorter and longer than this). At the moment, shorter-term CDs generally have higher interest rates.T-bills: Offered in short-term maturities of 4, 8, 13, 17, 26, and 52 weeks. Rates are very similar across all terms, though 52-week T-bills currently have the lowest yields.If you want to get your money back in under three months, T-bills may be the better choice. If you’re OK with locking it up for longer, CDs might work for you.Which pays more?CDs and T-bills currently offer similar interest rates, though it varies based on the term.CDs: Right now, most CDs yield about 4.00%. Some CDs with terms of 14 months or less pay up to 4.50%.T-bills: Recent yields have been between 4.12% and 4.32%, depending on the maturity date.Which is easier to buy?CDs and T-bills are both easy to purchase, but the process is different.CDs: You can invest in CDs through banks, credit unions, and brokerages. Once you invest, your money is generally locked in until maturity unless you pay an early-withdrawal penalty.T-bills: You can buy T-bills directly from the U.S. Treasury at TreasuryDirect.gov or through a brokerage account.Tie-breaker: Which is easier to sell?Most people who buy CDs and T-bills hold them until they mature, then collect the interest. However, both can also be sold if they’re held in a brokerage account. There’s more investor demand for T-bills, so it’s easier to sell T-bills quickly and at the price you want.Want to earn a guaranteed APY of up to 4.50%? Check out our list of the best CD rates.How much will you owe in taxes?The interest you earn will generally be taxed unless your investments are held in a tax-advantaged account, like an individual retirement account (IRA).CDs: Interest earned is subject to federal, state, and local income taxes.T-bills: Interest is exempt from state and local taxes but still taxed at the federal level.If you live in a high-tax state, T-bills may have an edge because they avoid state income taxes.Which one should you choose?Pick CDs if: You want the highest interest rate available and plan to keep the CD until it matures.Pick T-bills if: You want a shorter term than CDs offer, live in a high-tax state, or plan to sell your investments on the secondary market.There’s no one-size-fits all answer, so consider all the above and shop around for the best rates before you invest in either CDs or T-bills.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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If you’re looking for a safe place to park your cash, certificates of deposit (CDs) and Treasury bills (T-bills) are two solid options. Both offer decent yields with practically zero risk, but they work in different ways.

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So, which one is the better choice right now? Let’s look at the pros and cons of each.

How long does your money stay locked in?

CDs and T-bills both have fixed terms, but they offer different levels of flexibility.

• CDs: Terms typically range from 3 months to 5 years (although it’s possible to find terms that are both shorter and longer than this). At the moment, shorter-term CDs generally have higher interest rates.
• T-bills: Offered in short-term maturities of 4, 8, 13, 17, 26, and 52 weeks. Rates are very similar across all terms, though 52-week T-bills currently have the lowest yields.

If you want to get your money back in under three months, T-bills may be the better choice. If you’re OK with locking it up for longer, CDs might work for you.

Which pays more?

CDs and T-bills currently offer similar interest rates, though it varies based on the term.

• CDs: Right now, most CDs yield about 4.00%. Some CDs with terms of 14 months or less pay up to 4.50%.
• T-bills: Recent yields have been between 4.12% and 4.32%, depending on the maturity date.

Which is easier to buy?

CDs and T-bills are both easy to purchase, but the process is different.

• CDs: You can invest in CDs through banks, credit unions, and brokerages. Once you invest, your money is generally locked in until maturity unless you pay an early-withdrawal penalty.
• T-bills: You can buy T-bills directly from the U.S. Treasury at TreasuryDirect.gov or through a brokerage account.

Tie-breaker: Which is easier to sell?

Most people who buy CDs and T-bills hold them until they mature, then collect the interest. However, both can also be sold if they’re held in a brokerage account. There’s more investor demand for T-bills, so it’s easier to sell T-bills quickly and at the price you want.

Want to earn a guaranteed APY of up to 4.50%? Check out our list of the best CD rates.

How much will you owe in taxes?

The interest you earn will generally be taxed unless your investments are held in a tax-advantaged account, like an individual retirement account (IRA).

• CDs: Interest earned is subject to federal, state, and local income taxes.
• T-bills: Interest is exempt from state and local taxes but still taxed at the federal level.

If you live in a high-tax state, T-bills may have an edge because they avoid state income taxes.

Which one should you choose?

• Pick CDs if: You want the highest interest rate available and plan to keep the CD until it matures.
• Pick T-bills if: You want a shorter term than CDs offer, live in a high-tax state, or plan to sell your investments on the secondary market.

There’s no one-size-fits all answer, so consider all the above and shop around for the best rates before you invest in either CDs or T-bills.

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This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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