Treasury Bills (T-Bills)

Treasury Bills (or T-Bills, as they are sometimes called) are short-term, money market securities issued by the U.S. Government and sold at a discount to the buyer with guaranteed return after a period of time. They don't pay interest as in they don't accrue interest after some time, but the interest it pays out is the difference between what the T-bill is sold for and its face value (sometimes called par amount).

Highlights

• A Treasury Bill (T-Bill) is a short-term debt obligation backed by the U.S. Treasury Department with a maturity of one year or less.
• The more drawn out the maturity date, the higher the interest rate that the T-Bill will pay to the investor.
• Treasury bills are generally sold in denominations of $1,000 while some can arrive at a maximum denomination of $5 million.

FAQ

How Are T-Bills Different From Treasury Notes and Bonds?

T-bills are short-term government debt instruments with maturities of one year or less, and they are sold at a discount without paying a coupon. T-Notes represent the medium-term maturities of 2, 3, 5, 7, and 10 years. These are issued at par ($100) and pay semi-annual interest. T-Bonds are otherwise identical to T-notes but have maturities of 30 years (or longer now and again).

How Might I Buy a Treasury Bill?

U.S. Treasury bills are auctioned on a normal schedule. People can buy T-bills from the government utilizing the TreasuryDirect website. It is free to register, and it will function like a brokerage account that holds your bonds. In addition to bidding on new issues, You likewise can set up reinvestments into securities of a similar type and term. For instance, you can utilize the proceeds from a maturing 52-week bill to buy another 52-week bill. Certain brokerage firms may likewise permit trading in U.S. Treasuries.

Where Is My Paper Hard Copy of the T-Bill I Bought?

T-bills and other government bonds are not generally issued on paper and are just accessible in digital form through TreasuryDirect or your broker.

What Are the Maturity Terms for Treasury Bills?

U.S. Treasury bills are short-term government bonds and are issued with 5 terms. These consist of 4, 8, 13, 26, and 52 weeks.

What Kind of Interest Payments Will I Receive If I Own a Treasury Bill?

The possibly interest paid will be the point at which the bill matures. At that time, you are given the full face value. T-bills are zero-coupon bonds that are normally sold at a discount and the difference between the purchase price and the par amount is your accrued interest.