Treasury Bills - FAQs — TreasuryDirect (2024)

FAQs

What are the rules for Treasury bills? ›

When the bill matures, you are paid its face value. You can hold a bill until it matures or sell it before it matures.

T-bills are issued with maturities of only a few weeks to a few months. This means that investors looking for longer-term investments may need alternative options. If interest rates rise, the value of T-bills will decline, resulting in a potential loss for investors who need to sell their holdings before maturity.

TreasuryDirect requires Treasury marketable securities originally issued in an account be held for 45 days before they may be transferred. 4-Week Bills bought at original issue in TreasuryDirect may not be transferred at all because of a 28-day term.

A Treasury bill (T-Bill) is a short-term U.S. government debt obligation backed by the Treasury Department. Terms range from four to 52 weeks. T-bills are issued at a discount from the par value, also known as the face value. Treasury bills are usually sold in denominations of $1,000.

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.

Bills can be scheduled for reinvestment for up to two years; other eligible Treasury marketable securities can be scheduled to reinvest one time. When your bill matures, the proceeds will be reinvested or used to purchase the next available security of the same type and term as the original purchase.

3 Month Treasury Bill Rate is at 5.25%, compared to 5.22% the previous market day and 5.04% last year. This is higher than the long term average of 4.19%. The 3 Month Treasury Bill Rate is the yield received for investing in a government issued treasury security that has a maturity of 3 months.

A Treasury bill, or T-bill, is a short-term debt obligation backed by the U.S. Treasury Department. It's one of the safest places you can save your cash, as it's backed by the full faith and credit of the U.S. government. T-bills are auctioned off at a discount and then redeemed at maturity for the full amount.

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.

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.

Like Treasury bonds and notes, T-bills have no default risk since they're backed by the U.S. government.

For example, let's say you have $20,000 in extra cash. You can use $5,000 to buy a three-month Treasury bill, another $5,000 for six months, then buy 9 & 12 months with the remaining money. In three months, when the first bill has matured, you can take a look at the current interest rate.

When 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.

In Treasury Direct, when you buy a Treasury marketable security, you must hold it in your TreasuryDirect account for 45 days before selling or transferring it. This means you can't sell or transfer a 4-week bill from TreasuryDirect because it matures in less than 45 days.

Upon maturity of the T-bills, when will I receive the principal amount? On maturity, the principal amount will be credited to your respective account by the end of the day, typically after 6pm. For cash applications: The principal amount will be credited to your designated Direct Crediting Service bank account.