Treasury bills, or bills, are typically issued at a discount from the par amount (also called face value). For example, if you buy a $1,000 bill at a price per $100 of $99.986111, then you would pay $999.86 ($1,000 x .99986111 = $999.86111).* When the bill matures, you would be paid its face value, $1,000. Your interest is the face value minus the purchase price. It is possible for a bill auction to result in a price equal to par, which means that Treasury will issue and redeem the securities at par value.
You can buy a bill in TreasuryDirect or through a bank or broker. The table below shows the types of bills available for purchase by both means. (We no longer sell bills in Legacy Treasury Direct, which we are phasing out.)
| Term | TreasuryDirect | Bank or Broker |
| 4-Week Bill | Yes | Yes |
| 8-Week Bill | Yes | Yes |
| 13-Week Bill | Yes | Yes |
| 17-Week Bill | Yes | Yes |
| 26-Week Bill | Yes | Yes |
| 52-Week Bill | Yes | Yes |
| Cash Management Bills | No | Yes |
You can bid for a bill in two ways:
- With a noncompetitive bid, you agree to accept the discount rate determined at auction. With this bid, you are guaranteed to receive the bill you want, and in the full amount you want.
- With a competitive bid, you specify the discount rate you are willing to accept. Your bid may be: 1) accepted in the full amount you want if the rate you specify is less than the discount rate set by the auction, 2) accepted in less than the full amount you want if your bid is equal to the high discount rate, or 3) rejected if the rate you specify is higher than the discount rate set at the auction.
To place a noncompetitive bid, you may use TreasuryDirect, or a bank or broker.
To place a competitive bid, you must use a bank or broker.
Key Facts:
- Bills are sold at a discount. The discount rate is determined at auction.
- Bills pay interest only at maturity. The interest is equal to the face value minus the purchase price.
- Bills are sold in increments of $100. The minimum purchase is $100.
- All bills except 52-week bills and cash management bills are auctioned every week. The 52-week bill is auctioned every four weeks. Cash management bills aren't auctioned on a regular schedule.
- Cash management bills are issued in variable terms.
- Bills are issued in electronic form.
- You can hold a bill until it matures or sell it before it matures.
- In a single auction, a bidder can buy up to $10 million in bills by non-competitive bidding or up to 35% of the initial offering amount by competitive bidding.
*Treasury rounds to the nearest penny using conventional mathematical rounding methods.
FAQs
Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.
How much will I make on a 4 week treasury bill? ›
4 Week Treasury Bill Rate is at 5.28%, compared to 5.28% the previous market day and 4.32% last year. This is higher than the long term average of 1.41%. The 4 Week Treasury Bill Rate is the yield received for investing in a US government issued treasury bill that has a maturity of 4 weeks.
How much can you make on a 3 month treasury bill? ›
Basic Info. 3 Month Treasury Bill Rate is at 5.26%, compared to 5.26% the previous market day and 5.26% last year. This is higher than the long term average of 4.19%.
Is there a limit on how many Treasury bills you can buy? ›
The limit for noncompetitive purchases is $10 million for each security type and term, for each auction. This limit applies regardless of whether you're buying a bill, note, bond, Floating Rate Note, or TIPS, and regardless of what method you use to make the purchase (TreasuryDirect, broker, or dealer).
Is it better to buy Treasuries from broker or TreasuryDirect? ›
There are several ways to buy Treasuries. For many people, TreasuryDirect is a good option; however, retirement savers and investors who already have brokerage accounts are often better off buying bonds on the secondary market or with exchange-traded funds (ETFs).
What is the downside to buying T-bills? ›
T-bills pay a fixed rate of interest, which can provide a stable income. However, if interest rates rise, existing T-bills fall out of favor since their return is less than the market. T-bills have interest rate risk, which means there is a risk that existing bondholders might lose out on higher rates in the future.
Why don't people invest in the treasury bill? ›
Taxes: Treasury bills are exempt from state and local taxes but still subject to federal income taxes. That makes them less attractive holdings for taxable accounts. Investors in higher tax brackets might want to consider short-term municipal securities instead.
Should I put all my money in Treasury bills? ›
Are Treasury bills a good investment? Ultimately, whether Treasury bills are a good fit for your portfolio depends on your risk tolerance, time horizon and financial goals. T-bills are known to be low-risk short-term investments when held to maturity since the U.S. government guarantees them.
Are Treasury bills better than CDs? ›
Choosing between a CD and Treasuries depends on how long of a term you want. For terms of one to six months, as well as 10 years, rates are close enough that Treasuries are the better pick. For terms of one to five years, CDs are currently paying more, and it's a large enough difference to give them the edge.
How much does a $1000 T-bill cost? ›
To calculate the price, take 180 days and multiply by 1.5 to get 270. Then, divide by 360 to get 0.75, and subtract 100 minus 0.75. The answer is 99.25. Because you're buying a $1,000 Treasury bill instead of one for $100, multiply 99.25 by 10 to get the final price of $992.50.
Bonds typically pay a fixed amount of interest (usually paid twice per year). Interest from corporate bonds and U.S. Treasury bonds interest is typically taxable at the federal level. U.S. Treasuries are exempt from state and local income taxes.
What is the best treasury bill to buy? ›
Key Takeaways:
| ETF | Expense Ratio | Yield to maturity |
|---|
| iShares U.S. Treasury Bond ETF (ticker: GOVT) | 0.05% | 4.3% |
| U.S. Treasury 10 Year Note ETF (UTEN) | 0.15% | 4.1%* |
| iShares iBonds Dec 2033 Term Treasury ETF (IBTO) | 0.07% | 4.1% |
| Global X 1-3 Month T-Bill ETF (CLIP) | 0.07% | 5.5% |
3 more rowsWhen you buy T-bills through your bank, it may charge you additional fees and expenses such as sales commissions or transaction charges. These extra costs can add up over time and eat into your returns on your investment.
How do Treasury bills work for dummies? ›
Treasury bills, or bills, are typically issued at a discount from the par amount (also called face value). For example, if you buy a $1,000 bill at a price per $100 of $99.986111, then you would pay $999.86 ($1,000 x . 99986111 = $999.86111). * When the bill matures, you would be paid its face value, $1,000.
What is a 1 year T-Bill paying today? ›
1 Year Treasury Rate is at 5.18%, compared to 5.19% the previous market day and 5.11% last year. This is higher than the long term average of 2.95%. The 1 Year Treasury Rate is the yield received for investing in a US government issued treasury security that has a maturity of 1 year.
Is TreasuryDirect a good idea? ›
If you're looking for a safe place to park your cash, you may want to consider T-bills or other government securities. Since your return will be lower than the return of riskier fixed-income and equity investments, using TreasuryDirect is smart, since it cuts out the middleman — and eliminates any commissions and fees.
Does TreasuryDirect charge fees? ›
TreasuryDirect is free. There are no fees, no matter how much or how little you invest. You may hold both savings bonds and Treasury marketable securities in TreasuryDirect. Your securities in TreasuryDirect are electronic, so you don't have to worry about them getting lost, stolen, or damaged.
What are the weaknesses of Treasury bonds? ›
But while they are lauded for their security and reliability, potential drawbacks such as interest rate risk, low returns and inflation risk must be carefully considered. If you're interested in investing in Treasury bonds or have other questions about your portfolio, consider speaking with a financial advisor.
What is the downside of Treasury I bonds? ›
Key Points. Pros: I bonds come with a high interest rate during inflationary periods, they're low-risk, and they help protect against inflation. Cons: Rates are variable, there's a lockup period and early withdrawal penalty, and there's a limit to how much you can invest.
