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
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? ›
3 Month Treasury Bill Rate is at 5.25%, compared to 5.25% the previous market day and 5.12% last year. This is higher than the long term average of 4.19%.
Can I buy more than $10,000 in Treasury bills? ›
Is there a maximum amount I can buy? In a calendar year, one Social Security Number or one Employer Identification Number may buy: up to $10,000 in electronic I bonds, and. up to $5,000 in paper I bonds (with your tax refund)
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).
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.
What is a better investment than Treasury bills? ›
Treasury bonds—also called T-bonds—are long-term debt obligations that mature in terms of 20 or 30 years. They're essentially the opposite of T-bills as they're the longest-term and typically the highest-yielding among T-bills, T-bonds, and Treasury notes.
Why would anyone buy Treasury bills? ›
Right now, the 3-month Treasury bill rate is 5.25% while the 30-year Treasury rate is 4.58%. So, if you're looking for a risk-free way to earn interest on your cash over a short period of time, investing in a T-bill could be a good choice.
What is the largest Treasury bill you can buy? ›
T-bills sell in increments of $100 up to a maximum of $10 million, and you can buy them directly from the government through its TreasuryDirect website, or through a brokerage, bank or self-directed retirement account, like a Roth IRA.
Are Treasury bills better than CDs? ›
If you're saving for a goal less than a year away: If you're saving money for a goal with a short-time horizon, T-bills can make more sense than CDs. They provide a higher APY than savings accounts, and they're more liquid than CDs.
TreasuryDirect allows investors to buy Treasury bonds and bills directly from the U.S. government. It is not possible to open IRAs or other tax-advantaged accounts at TreasuryDirect. Investors must transfer bonds from TreasuryDirect to banks or brokerages if they want to sell them before the maturity date.
Is it better to buy Treasury bills at auction or on secondary market? ›
Investors can also buy T-bills in the secondary market, although purchasing new issues is generally a wiser option. If you buy bonds in the secondary market, you'll have to pay the bid/ask spread, an unnecessary cost since auctions are held frequently.
How to calculate profit on Treasury bills? ›
To calculate yield, subtract the bill's purchase price from its face value and then divide the result by the bill's purchase price. Finally, multiply your answer by 100 to convert it to a percentage. The image below provides a visual of this formula.
How to calculate interest income on Treasury bills? ›
Face Value Redemption and Interest Rate
For example, suppose an investor purchases a 52-week T-bill with a face value of $1,000. The investor paid $975 upfront. The discount spread is $25. After the investor receives the $1,000 at the end of the 52 weeks, the interest rate earned is 2.56% (25 / 975 = 0.0256).
How to calculate T-bill price? ›
As a simple example, say you want to buy a $1,000 Treasury bill with 180 days to maturity, yielding 1.5%. 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.
Do Treasuries pay monthly? ›
We sell Treasury Notes for a term of 2, 3, 5, 7, or 10 years. Notes pay a fixed rate of interest every six months until they mature. You can hold a note until it matures or sell it before it matures.
