Time to Reconsider 4-Week T-Bill Purchase?

Exactly one month ago, I canceled our $3000 weekly 4-Week T-Bill purchase after the interest rate dropped to 4.757%, far less than the 5.15% APY we earned from EmigrantDirect at that time.

In the past month, we have seen changes on both the banking and T-Bill fronts and the new developments made me wonder if it's time to bring back the T-Bills into our savings. First, EmigrantDirecte cut its interest rate to 5.05% at the end of September. And almost at the same time, the interest of the T-Bill reached a low of 4.624% on September 28th. Since then, the rate has rebounded nicely, and the latest auction on October 12th set the APR at 5.038%, virtually identical to what EmigrantDirect offers.

However, as interests earned from T-Bills are exempted from state income taxes, the T-Bills work out slightly better than savings at EmigrantDirect. Of course, since the T-Bill interest only passed the 5% mark once in the latest auction, whether or not it will stay there is not clear. In addition, recent government reports painted a moderate inflation picture and that will not help pushing up the rates.

I will keep an eye on the rate changes and decide when to jump in again.

Click here to see the historical rates of 4-week T-Bills and other Treasury products. 

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