How CDs Compare to Treasurys, Money Market Funds and Other "Safe Haven" Investments

What you need to know about risk, returns, liquidity and taxes before choosing the right safe haven for you.

When the economy gets shaky, investors often steer toward “safe haven" assets—places to park your money where the ride is calmer and the odds of loss are low. These options won't make you rich overnight, but they can help preserve your savings when markets are throwing a tantrum.

Safe haven investments tend to be low-risk, steady and built for capital preservation. Certificates of deposit (CDs) are a classic choice, but they're far from the only one. In this guide, we'll break down how CDs compare with Treasurys, money market funds and other reliable low-volatility options so you can understand how each one holds up when the economic weather turns rough.

What Are CDs?

A certificate of deposit (CD) grows your money at a guaranteed interest rate in exchange for keeping your money in place for a set period of time. When the term ends (known as the maturity date), you get your original deposit back plus the interest you earned.

How CDs work

• Interest rates: Most CDs offer a fixed interest rate. Some financial institutions also provide variable-rate CDs tied to a market index or bump-up CDs that let you raise the rate once during the term.


• Term length: CDs earn interest over a fixed term, usually three months to five years or more.


• Penalties: Withdrawing funds early can trigger a penalty or forfeited interest. No-penalty CDs are the exception and allow early withdrawals without fees.


• FDIC/NCUA insurance: CDs from FDIC-insured banks are insured up to $250,000 per account holder, ownership category, per FDIC-insured bank. The National Credit Union Administration (NCUA) provides similar protection.

When stability is your priority, CDs offer a straightforward and predictable way to grow your money with minimal risk. “People who choose a CD are looking for confidence and FDIC insurance through that term,” said Pierre Habis, General Manager and Head of Synchrony Bank.

What Are Treasurys?

Treasury securities are loans you make to the U.S. government. You give the government money now and it promises to pay you back later, plus interest. Because the federal government has a strong track record of paying its debts, Treasurys are widely seen as one of the safest places to put your money.

The main types—T-bills, T-notes and T-bonds—are easy to buy and sell, which means you can move your money out of them before they mature, if needed.

Most Treasurys are marketable, which means you're not locked in until the end. You can sell them to someone else on the secondary market if you need your money back before they mature.

Treasury bills (T-bills)

Treasury bills are low-risk, short-term investments issued at a discount.

• Terms: 4, 6, 8, 13, 17, 26 or 52 weeks


• Interest rate: Fixed and determined at auction


• Minimum purchase: $100 increments


• How they earn money: You buy them for less than face (par) value and receive the full value at maturity.


• How they're taxed: Interest is taxed federally but is exempt from state and local taxes.

Treasury bonds (T-bonds)

Treasury bonds are long-term securities ideal for investors who want predictable, semi-annual payments.

• Terms: 20 or 30 years


• Interest rate: Fixed for the entire term, never below 0.125%


• Minimum purchase: $100 increments


• How they earn money: Interest is paid every six months until maturity.


• How they're taxed: Interest is taxed federally but is exempt from state and local taxes.

T-bonds are different from U.S. savings bonds, which are tied to your Social Security number and can't be sold or transferred.

Treasury notes (T-notes)

Treasury notes fall between T-bonds and T-bills in terms of maturity.

• Terms: 2, 3, 5, 7 or 10 years


• Interest rate: Fixed for the term, never below 0.125%


• Minimum purchase: $100 increments


• How they earn money: Interest is paid every six months until maturity.


• How they're taxed: Interest is taxed federally but is exempt from state and local taxes.

Other Treasury securities

Here are a few other types of Treasury marketable securities:

• Floating Rate Notes (FRNs): Interest rates can rise and fall. They're issued for two-year terms and pay interest quarterly.


• Treasury Inflation-Protected Securities (TIPS): Principal adjusts with inflation using the Consumer Price Index. Terms are for 5, 10 or 30 years and interest is paid every six months.


• Separate Trading of Registered Interest and Principal of Securities (STRIPS): Allows investors to hold or trade the interest and principal parts of certain Treasury securities as separate components.

What Are Money Market Funds?

Money market funds are low-risk mutual funds that aim to give investors quick access to cash as well as modest, steady returns.

Defining a mutual fund

A mutual fund pools money from many investors and uses it to buy a diversified mix of stocks, bonds and other assets. When you invest in a mutual fund, you own a slice of the entire portfolio.

How money market funds work

Money market funds put your money into short-term investments that are designed to be very stable and very low risk. These investments mature quickly, which makes it easier for the fund to turn them back into cash when investors want out. Here's what that means for investors:

• You can usually take your money out quickly.


• The share price is meant to stay close to $1.


• Returns are modest but steady.


• Losses are rare, though still possible.

When the fund earns more than it needs to hold the share price at $1, it pays that extra out as dividends. In rare cases, a fund can drop below $1—called “breaking the buck"—but SEC rules added after the 2008 crisis and in 2023 aim to make these funds more stable.

Money market funds aren't insured by the FDIC but are still considered one of the safer investment options.

Money market funds vs. money market accounts

Money market funds and money market accounts sound similar, but they're actually very different.

• Money market funds are investments. Your money goes into a pool of short-term securities, and the value can move slightly up or down. They're not insured by the FDIC.


• Money market accounts are bank accounts. They work like savings accounts but may pay a higher interest rate and sometimes offer limited check writing or debit access. They're typically FDIC-insured up to the usual limits.

In short:

• Funds = investment with modest risk


• Accounts = insured savings account

Same name, completely different purpose.

Overview of Other Safe Haven Investments

While CDs, Treasurys and money market funds are among the most common safe haven options, they aren't the only places people turn when they want stability. Depending on your goals, a few other choices may also fit the bill.

High yield savings accounts

A high yield savings account (HYSA) is an account that pays a significantly higher interest rate than a standard savings account. While traditional savings accounts often pay very little, HYSAs can offer competitive rates.

High yield savings accounts are easy to access, simple to manage and typically insured by the FDIC or NCUA up to the standard limits. Depending on the bank or credit union, some HYSAs may require a minimum balance or have specific account conditions, especially for promotional rates.

While the interest rate can rise or fall over time, your balance does not move with the market, which keeps these accounts very low risk.

READ MORE: Money Market vs. Savings Accounts: Which Is Right for You?

Short-term bond funds

Short-term bond funds pool money from many investors and buy bonds with shorter maturities, often around two years or less. Some funds focus on government bonds, while others may include corporate or municipal bonds.

While considered fairly stable in value, they carry more risk than CDs or Treasury securities. Because the fund's share price can go up or down, you may experience gains or losses when you sell. Risk and return vary depending on the types of bonds the fund chooses.

Stable value funds

Stable value funds typically invest in high-quality government or corporate bonds paired with insurance contracts designed to reduce volatility. They're most often available in workplace retirement plans and are considered very conservative.

Over long periods, their returns may not keep up with inflation, so they're usually part of a broader retirement strategy rather than the main growth engine.

Gold and precious metals

Gold and other precious metals are often seen as safe havens because they don't rely on company profits or the stock market. They're physical items you can hold, which some people find reassuring during uncertain times.

Their prices can still swing up or down, and they don't pay interest or dividends. Over time, their value has moved differently from other types of investments, which is why people use them in different ways depending on what they're looking for.

Comparing Safety and Risk

Safe haven investments all aim to protect your money, but they each have different kinds of risk. The three big ones to understand are credit risk, interest rate risk and inflation risk.

Credit risk

Credit risk is the chance that the person or institution you lent money to might not pay you back. Here's how the main safe haven options stack up:

Interest rate risk

Interest rate risk refers to the chance that your investment changes value when market rates move.

Inflation risk

Inflation risk is the chance that your returns won't keep up with rising prices.

Comparing Returns

Instead of focusing on exact rates, it helps to look at how each type of investment generally behaves when it comes to returns.

In general, CDs are the most predictable because their rate doesn't change. Treasurys are steady too, but their returns can move with the economy. Money market funds change the most since their returns rise and fall with short-term market rates.

Liquidity and Access to Funds

Safe haven investments don't all work the same when it comes to how quickly you can get your money back. Some are designed for easy access, while others require you to keep your money in place for a set period. Here's how the major safe haven assets compare.

• CDs: Lock your money for a set term. Early withdrawals usually mean penalties or lost interest.


• Money market funds: Offer easy access. You can buy or sell shares on most business days.


• Treasurys: Have set maturities, but you can sell them before they're due. The price you get may be higher or lower than what you paid.

Your timeline can play a big role in deciding which option fits your needs. Some people keep highly liquid funds for emergencies or short-term goals, then use less liquid options for longer-term plans (like retirement). Before choosing an investment, it helps to think about how quickly you may need the money and how that lines up with your goals.

“With a CD, you know exactly when the term is up,” Habis said. “And it gives you optionality in terms of how you want the interest to be paid to you. On Synchrony’s website, you can let the interest accrue, or you can move it monthly to your checking account -- you have flexibility in how you distribute it, which isn’t always the case with other products.”

Tax Considerations

Safe haven investments are taxed in different ways depending on how they earn interest and the rules in your city or state. Here's a quick comparison:

Keeping accurate records of any interest or dividends you earn can make tax reporting easier. If you have questions about how taxes apply to your situation, a qualified tax professional or financial advisor can help explain your options.

Use Cases and Investor Profiles

Different safe haven investments fit different situations, depending on how quickly someone may need the money and what their goals are.

• CDs: Since your funds are locked in for a set term, CDs are often used for savings goals that are a few years away and where predictable returns matter. Examples might include college tuition or a down payment on a house.


• Money market funds: Because shares can typically be sold on most business days, these funds are often used for cash that may need to be accessed quickly. This liquidity can make them a good choice for an emergency fund. The interest rate can also make them suitable for mid-term goals or longer, depending on the type of fund.


• Treasurys: With terms ranging from weeks to decades, Treasurys can fit both short-term and long-term goals. They can be sold before maturity, although the amount received may be higher or lower than the purchase price.


• High yield savings accounts: HYSAs don't fluctuate with the market and they offer easy access to cash, so people often use them for funds they want readily available.

Choosing the Right Safe Haven for You

Safe haven investments can give your money a steadier place to rest when markets get bumpy, but each one offers its own mix of safety, access and earning potential. The best match depends on what you're saving for, how long you plan to keep the money parked and how much risk you're comfortable taking on.

If CDs are on your radar, Synchrony offers a range of CD options you can explore to see how they line up with your goals. Learn more here.