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Treasury Bills: A Beginner's Guide to T-Bills & How to Buy
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Treasury Bills: A Beginner’s Guide to T-Bills and How to Buy
T-bills are short-term U.S. debt securities. They are currently paying around 4% and are considered a risk-free investment if held to maturity.
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What is a Treasury bill?Treasury bills (T-bills) are short-term U.S. debt securities issued by the federal government that mature in four weeks to one year. This shorter maturity period differentiates them from other Treasury-issued securities. Because the U.S. government backs T-bills, they're considered virtually risk-free if held for the entire term.
Treasury bills (T-bills) are short-term U.S. debt securities issued by the federal government that mature in four weeks to one year. This shorter maturity period differentiates them from other Treasury-issued securities. Because the U.S. government backs T-bills, they're considered virtually risk-free if held for the entire term.T-bills are typically sold in $100 increments and can be purchased online from the Treasury Department, a brokerage or a bank
T-bills are typically sold in $100 increments and can be purchased online from the Treasury Department, a brokerage or a bank TreasuryDirect. Treasury Bills In Depth. Accessed Jun 21, 2024. .How Treasury bills work
How Treasury bills workTreasury bills are assigned a par value (or face value), which the bill is worth if held throughout the term. You buy bills at a discount — a price below par — and profit from the difference at the end of the term. The most common terms for T-bills are four, eight, 13, 17, 26 and 52 weeks.
Treasury bills are assigned a par value (or face value), which the bill is worth if held throughout the term. You buy bills at a discount — a price below par — and profit from the difference at the end of the term. The most common terms for T-bills are four, eight, 13, 17, 26 and 52 weeks.T-bills don’t pay interest in the same way as other Treasurys. Instead, you buy the bills at a discounted price and hold them until the end of the term. Once the term ends, or reaches maturity, you receive the face value. It's as simple as that — you gave the government a short-term loan by buying T-bills, and they paid you back with "interest" at the end of the term.
T-bills don’t pay interest in the same way as other Treasurys. Instead, you buy the bills at a discounted price and hold them until the end of the term. Once the term ends, or reaches maturity, you receive the face value. It's as simple as that — you gave the government a short-term loan by buying T-bills, and they paid you back with "interest" at the end of the term.» Learn more: What are fixed-income securities?
» Learn more: » Learn more: What are fixed-income securities ?Brokerage firms
Brokerage firms
Brokerage firmson Charles Schwab's website
on E*TRADE's website
on Vanguard's website
on Fidelity's website
T-bill example
T-bill exampleLet's look at a Treasury bill auction to see how a Treasury bill purchase works. On May 15, 2024, the Treasury held an auction for a 17-week Treasury bill with an issue date of May 21 and a maturity date of Sept. 17. The price per $100 amounted to about $98.27, or an annualized discount rate (shown as a "high rate" in TreasuryDirect) of 5.225%
Let's look at a Treasury bill auction to see how a Treasury bill purchase works. On May 15, 2024, the Treasury held an auction for a 17-week Treasury bill with an issue date of May 21 and a maturity date of Sept. 17. The price per $100 amounted to about $98.27, or an annualized discount rate (shown as a "high rate" in TreasuryDirect) of 5.225% TreasuryDirect. Auction Search. Accessed Jun 20, 2024. .If you bought $1,000 worth of T-bills in this auction, that means you would have paid $982.73 on May 15. On Sept. 17, you'd receive $1,000, earning $17.27 on your investment.
If you bought $1,000 worth of T-bills in this auction, that means you would have paid $982.73 on May 15. On Sept. 17, you'd receive $1,000, earning $17.27 on your investment.If you were to reinvest in this T-bill for one year, you could arrive at an annual investment rate for your 17-week T-bill based on the actual purchase price of $982.73.
If you were to reinvest in this T-bill for one year, you could arrive at an annual investment rate for your 17-week T-bill based on the actual purchase price of $982.73.To explore how this works, use our T-bill calculator below.
To explore how this works, use our T-bill calculator below.T-bill rates compared with other Treasury securities
T-bill rates compared with other Treasury securitiesTreasury bills, notes and bonds are three types of U.S. debt securities that mainly differ in the length of maturity (shortest to longest). Treasury notes are intermediate-term investments that mature in two, three, five, seven and 10 years. Treasury bonds mature in 20 or 30 years.
Treasury bills, notes and bonds are three types of U.S. debt securities that mainly differ in the length of maturity (shortest to longest). Treasury notes are intermediate-term investments that mature in two, three, five, seven and 10 years. Treasury bonds mature in 20 or 30 years.Treasury notes and Treasury bonds pay interest every six months. Treasury bills don't pay a fixed interest rate. Instead, they are sold at a discount rate to their face value. The “interest” you receive (so to speak) is the difference between the face value of the bill and its discount rate when it matures.
Treasury notes and Treasury bonds pay interest every six months. Treasury bills don't pay a fixed interest rate. Instead, they are sold at a discount rate to their face value. The “interest” you receive (so to speak) is the difference between the face value of the bill and its discount rate when it matures.» Learn more: Treasury bonds vs. notes vs. bills
» Learn more: » Learn more: Treasury bonds vs. notes vs. bills ADEarn 3.71% APY by investing in U.S. Treasury Bills*
Earn 3.71 % APY by investing in U.S. Treasury Bills* Maximize your cash by investing in low-risk, government-backed T-Bills. All the work is done for you — just make the deposit and watch your money grow. Learn More *Rate when held to maturity. Rate shown is subject to price fluctuations.What causes Treasury bill rates to fall?
What causes Treasury bill rates to fall?Economic growth or decline, interest rates and inflation can all affect Treasury bill rates. Here's how it works:
Economic growth or decline, interest rates and inflation can all affect Treasury bill rates. Here's how it works:Demand for T-bills often drops during inflationary periods if the T-bill rates offered don't keep pace with inflation. When demand falls, T-bill rates often follow.
Demand for T-bills often drops during inflationary periods if the T-bill rates offered don't keep pace with inflation . When demand falls, T-bill rates often follow.The federal funds rate — the lending rate between banks — can also affect T-bill prices. When lending interest rates are high, investors tend to look toward more profitable investment options, such as stocks and funds, and away from Treasury bills.
The federal funds rate — the lending rate between banks — can also affect T-bill prices. When lending interest rates are high, investors tend to look toward more profitable investment options, such as stocks and funds, and away from Treasury bills.» Learn more: What is the federal funds rate?
» Learn more: » Learn more: What is the federal funds rate?Are Treasury bills a good investment?
Are Treasury bills a good investment?T-bills are known to be low-risk, short-term investments when held to maturity because the U.S. government guarantees them.
T-bills are known to be low-risk, short-term investments when held to maturity because the U.S. government guarantees them.Treasury bills typically earn lower returns than other debt securities and even some certificates of deposit. As a result, Treasury bills may be most attractive to conservative investors who want to earn a little interest without the risk of more volatile investments such as individual stocks.
Treasury bills typically earn lower returns than other debt securities and even some certificates of deposit . As a result, Treasury bills may be most attractive to conservative investors who want to earn a little interest without the risk of more volatile investments such as individual stocks.Whether Treasury bills are a good fit for your portfolio depends on your risk tolerance, time horizon and financial goals.
Whether Treasury bills are a good fit for your portfolio depends on your risk tolerance, time horizon and financial goals.» Learn more:
» Learn more: » Learn more:How to buy Treasury bills
How to buy Treasury billsT-bills are now only available in electronic form. You can buy Treasury bills directly from the government at TreasuryDirect.gov, through a brokerage account, via bond funds, or through certain savings accounts.
T-bills are now only available in electronic form. You can buy Treasury bills directly from the government at TreasuryDirect.gov , through a brokerage account, via bond funds , or through certain savings accounts.Buying Treasury bills from TreasuryDirect
Buying Treasury bills from TreasuryDirectTreasuryDirect is accessible to anyone with internet access, a taxpayer identification number or Social Security number, a U.S. address, and a checking or savings account to link for payment. TreasuryDirect sells Treasury bills by auction, at a discount to their face value. The yield on a Treasury bill is equal to its face value divided by its purchase price, minus 1.
TreasuryDirect is accessible to anyone with internet access, a taxpayer identification number or Social Security number, a U.S. address, and a checking or savings account to link for payment. TreasuryDirect sells Treasury bills by auction, at a discount to their face value. The yield on a Treasury bill is equal to its face value divided by its purchase price, minus 1.Buying Treasury bills through a brokerage account
Buying Treasury bills through a brokerage accountFifteen of the brokers reviewed by NerdWallet allow investors to purchase individual Treasury bills.
Fifteen of the brokers reviewed by NerdWallet allow investors to purchase individual Treasury bills.» More: Best online brokers for bonds
» More: » More: Best online brokers for bondsAs with TreasuryDirect, bills are typically sold at a discount to their face value, and this discount determines the yield an investor will earn by holding a bill to maturity.
As with TreasuryDirect, bills are typically sold at a discount to their face value, and this discount determines the yield an investor will earn by holding a bill to maturity.Investing in Treasury bills via exchange-traded funds (ETFs)
Investing in Treasury bills via exchange-traded funds (ETFs)If you have a brokerage account that doesn't offer individual bonds, you can still invest in Treasury bills via a bond ETF.
If you have a brokerage account that doesn't offer individual bonds, you can still invest in Treasury bills via a bond ETF.The three largest Treasury bill ETFs by assets under management at the time of last update are the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), the iShares 0-3 Month Treasury Bond ETF (SGOV) and the iShares Short Treasury Bond ETF (SHV).
The three largest Treasury bill ETFs by assets under management at the time of last update are the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), the iShares 0-3 Month Treasury Bond ETF (SGOV) and the iShares Short Treasury Bond ETF (SHV).Since these funds invest in multiple Treasury bills, calculating their yield is a bit complicated. The best place to look for a T-bill fund's yield is on the fund's website; search for the word "yield" on the page.
Since these funds invest in multiple Treasury bills, calculating their yield is a bit complicated. The best place to look for a T-bill fund's yield is on the fund's website; search for the word "yield" on the page.It's worth keeping in mind that bond funds have expense ratios, and the annual yield you'll actually earn is likely to be the stated yield, minus the expense ratio. However, many Treasury bill funds, including the three listed above, have very low expense ratios (0.15% or less).
It's worth keeping in mind that bond funds have expense ratios , and the annual yield you'll actually earn is likely to be the stated yield, minus the expense ratio. However, many Treasury bill funds, including the three listed above, have very low expense ratios (0.15% or less).Treasury accounts
Treasury accountsSome brokerage firms also offer Treasury accounts, a relatively new product that does the work of purchasing T-bills for you, holding them to maturity and then reinvesting the profits. (NerdWallet has a partnership with Atomic Treasury to offer a Treasury account. Public, an online broker we review, also offers a Treasury account.)
Some brokerage firms also offer Treasury accounts, a relatively new product that does the work of purchasing T-bills for you, holding them to maturity and then reinvesting the profits. (NerdWallet has a partnership with Atomic Treasury to offer a Treasury account. Public , an online broker we review, also offers a Treasury account.) ADEarn 3.71% APY by investing in U.S. Treasury Bills*
Earn 3.71 % APY by investing in U.S. Treasury Bills* Maximize your cash by investing in low-risk, government-backed T-Bills. All the work is done for you — just make the deposit and watch your money grow. Learn More *Rate when held to maturity. Rate shown is subject to price fluctuations.How are Treasury bills taxed?
How are Treasury bills taxed?Investors owe federal taxes on any income earned from Treasury bills, but no state or local tax. This state and local tax exemption applies to bills purchased via TreasuryDirect, a brokerage account, and most Treasury accounts.
Investors owe federal taxes on any income earned from Treasury bills, but no state or local tax. This state and local tax exemption applies to bills purchased via TreasuryDirect, a brokerage account, and most Treasury accounts.In theory, it also applies to Treasury bill funds — but ETF managers in general have broad leeway to choose which assets their funds invest in, and may change their strategy or invest in non-T-bill securities. Make sure you check out a Treasury bill fund's holdings before investing.
In theory, it also applies to Treasury bill funds — but ETF managers in general have broad leeway to choose which assets their funds invest in, and may change their strategy or invest in non-T-bill securities. Make sure you check out a Treasury bill fund's holdings before investing.Next steps
Next stepsWhat a brokerage account is and how to open one
What a brokerage account is and how to open one How to buy TreasurysAbout T-Bills
What is a Treasury bill? What is a Treasury bill? How Treasury bills work How Treasury bills work T-bill rates compared with other Treasury securities T-bill rates compared with other Treasury securities Are Treasury bills a good investment? Are Treasury bills a good investment? How to buy Treasury bills How to buy Treasury bills How are Treasury bills taxed? How are Treasury bills taxed? Next steps Next stepsAbout T-Bills
What is a Treasury bill? What is a Treasury bill? How Treasury bills work How Treasury bills work T-bill rates compared with other Treasury securities T-bill rates compared with other Treasury securities Are Treasury bills a good investment? Are Treasury bills a good investment? How to buy Treasury bills How to buy Treasury bills How are Treasury bills taxed? How are Treasury bills taxed? Next steps Next steps More like this Investment Basics Investing Bonds Best Robo-Advisors: Top Picks for 2026 We spent hours testing robo-advisors to find ones that charge low fees but still offer high-quality features, including automated portfolio rebalancing, exposure to a range of asset classes and financial planning tools. 2 By Alana Benson, Sabrina Parys Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for April 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube Best Brokers for Beginner Investors: Top Picks for 2026 We spent hours analyzing the best brokers for beginners to find ones that offer low costs, helpful educational content and a broad investment selection. Our testers also looked for trading platforms that are easy to navigate. 2 By Alana Benson, Bella Avila Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana Best Brokerage Accounts for Online Investing and Stock Trading in 2026 Based on hours of analysis and hands-on testing, here are our picks for the best brokerage accounts based on their low fees, strong platforms, quality customer support and other factors. Chris Davis Best Robo-Advisors: Top Picks for 2026 We spent hours testing robo-advisors to find ones that charge low fees but still offer high-quality features, including automated portfolio rebalancing, exposure to a range of asset classes and financial planning tools. 2 By Alana Benson, Sabrina Parys Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for April 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube Best Brokers for Beginner Investors: Top Picks for 2026 We spent hours analyzing the best brokers for beginners to find ones that offer low costs, helpful educational content and a broad investment selection. Our testers also looked for trading platforms that are easy to navigate. 2 By Alana Benson, Bella Avila Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana Best Brokerage Accounts for Online Investing and Stock Trading in 2026 Based on hours of analysis and hands-on testing, here are our picks for the best brokerage accounts based on their low fees, strong platforms, quality customer support and other factors. Chris Davis Best Robo-Advisors: Top Picks for 2026 We spent hours testing robo-advisors to find ones that charge low fees but still offer high-quality features, including automated portfolio rebalancing, exposure to a range of asset classes and financial planning tools. 2 By Alana Benson, Sabrina Parys Investing in Dividend Stocks: Guide, Calculator and Top 7 Yields for April 2026 Dividend stocks can be a great choice for investors looking for passive income and portfolio stability. Here's what to look for when evaluating dividend stocks and how to invest in them. 2 By Chris Davis, Sam Taube Best Brokers for Beginner Investors: Top Picks for 2026 We spent hours analyzing the best brokers for beginners to find ones that offer low costs, helpful educational content and a broad investment selection. Our testers also looked for trading platforms that are easy to navigate. 2 By Alana Benson, Bella Avila Best Investments: Where to Invest in 2026 Wondering where to invest your money this year? High-yield savings accounts, CDs, bonds, funds and stocks are all considered among the best investments available. Learn more about the risks, potential returns and how to get started. 2 By Chris Davis, Alieza Durana