Your bank just sent you the letter. That 12-month CD you locked in last year has matured, and the renewal offer looks suspiciously close to the 1.68% national average the FDIC says banks are quietly paying right now. That is what happens when the Fed has trimmed its target range to 3.75%, and your bank hopes you sign the auto-renewal without doing the math. Before you do, look at three exchange-traded funds that turn that same cash into something that actually works: iShares 0-3 Month Treasury Bond ETF (NYSEARCA:SGOV), Vanguard Short-Term Corporate Bond ETF (NASDAQ:VCSH), and iShares Core Dividend Growth ETF (NYSEARCA:DGRO).
The Problem With Rolling It Over
The Fed cut rates 75 basis points between September and December 2025 and has held steady for eight months since. As a result, the average 12-month CD yield has slid from a peak of 1.76% last August and has barely lifted off its March 2026 low of 1.52%. Meanwhile, a plain 4-week Treasury bill is auctioning at a 3.69% investment yield, and the 13-week bill is closer to 3.83%. Simply put, your bank is keeping the spread, and you do not have to let them.
SGOV: The Cash Sleeve That Actually Pays
SGOV holds a rolling basket of U.S. Treasury bills maturing in zero to three months. That is about as close to a CD as a fund can get without the lockup. The 0.09% expense ratio means roughly $9 a year on a $10,000 balance, and monthly distributions land in your brokerage account instead of waiting for a maturity date. Over the past year, the fund returned 3.84% on a total-return basis, comfortably above the CD average, and the price has barely wobbled. If your only goal is to park emergency cash and earn what T-bills are paying, this is the direct swap.
VCSH: A Small Step Up in Yield
If you can accept a little more movement in your statement, VCSH stretches into short-dated investment-grade corporate bonds. Vanguard charges a 0.03% expense ratio, which is roughly $3 a year on a $10,000 stake, so almost every basis point of yield reaches you. The fund pays monthly, with an annualized forward yield near 3.59% and a trailing 12-month distribution of $3.5077 per share. Total return over the past year was 3.38%. Compared to your CD, you are trading a fixed guarantee for corporate credit risk and modest duration, and getting paid roughly double the national CD rate for it.
DGRO: The Growth Piece Your CD Never Had
A CD ladder can protect purchasing power for a year. It cannot grow it. DGRO tracks the Morningstar US Dividend Growth Index, a screened basket of profitable U.S. companies with consistent, rising payouts. The expense ratio is 0.08%, distributions arrive quarterly, and the trailing 12-month payout of $1.477673 per share keeps stepping higher year after year. The total return story is what a CD holder rarely sees: up 24.99% over the past year, 70.4% over five years, and 255.62% over ten. For the portion of your balance that does not need to be spent in the next few years, that is the compounding your bank was never going to hand you.
The Trade-Off
None of these are an FDIC-insured deposit, and each carries its own risk. SGOV’s yield will drop the day the Fed cuts again, because it is essentially a live-updating T-bill account. VCSH can lose principal if credit spreads widen or the 10-year Treasury (currently near 4.70%) continues to climb. DGRO is an equity fund and can draw down 20% or more in a bad market, dividend growth or not. A sensible answer is to layer them: SGOV for the cash you might actually need, VCSH for the middle bucket, and DGRO for money that can stay invested for years. That is the ladder your bank was hoping you would not build.
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