T-bills start to compete with savings accounts
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Treasury bill yields have risen so far, so fast, that they are now far above the yields that most Americans are getting on their savings or money market accounts. Public, an online brokerage, has decided to take advantage of that fact by offering a new account just for T-bills.
Why it matters: The new account is being marketed as a higher-yielding alternative to interest-bearing bank accounts. So long as the Fed keeps interest rates relatively high, parking your money in T-bills looks very attractive.
Background: While it's easy to use investing apps to buy stocks, it's often hard or impossible to use them to buy and sell bonds. Bond ETFs exist, but they charge fees and sometimes have suboptimal tax treatment for investors who hold while others are selling. Selling bonds bought on the U.S. government's own website is clunky.
- Public is changing that by partnering with the Bank of New York Mellon to offer six-month T-bills directly to investors, with no fee. When they mature, they're automatically reinvested at the next Treasury auction, giving depositors the best possible price.
- Public users can also sell T-bills at any time.
Between the lines: At launch, Public is only offering six-month T-bills, which just happen to be the highest-yielding Treasury securities that exist. The eye-grabbing headline 4.8% interest rate acts as a great marketing device.
- "We're aiming at the same flexibility as a high-yield savings account, but with even higher yield," Public CEO Jannick Malling tells Axios.
The catch: This isn't a bank account. If you want to pay someone, you still need to sell the securities in the account and transfer the money to your bank before being able to do so.
The bottom line: We've come a long way from the meme-stock frenzy of early 2021. T-bills won't get you rich quick, but they might get you a bit richer while being totally risk-free.
