Through TreasuryDirect. Investors who purchase T-Bills through TreasuryDirect are required to hold the bill for at least 45 days before transferring or selling it.
Through a bank or broker.
Best banks & brokers that offer access to treasury bills
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Other ways to buy treasury bills
Gain exposure to Treasury Bills through ETFs
In addition to purchasing T-Bills directly from the Treasury Department or via a bank or broker, it’s possible to gain exposure to the price and yield performance of T-Bills through exchange-traded funds (ETFs). Some T-Bill ETFs include:
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL)
SPDR Bloomberg 3-12 Month T-Bill ETF (BILS)
Best brokers that give you access to Treasury Bills through ETFs
Get $100 - $2,000 when you open and fund an account with $5,000 to $100,000+
What are Treasury Bills?
The US government sells T-Bills to raise money to help fund its debt and its day-to-day operations. When you buy a T-Bill, you are giving the US government a short-term loan. In return, you receive an interest payment when the bill matures. A Treasury Bill (T-Bill) is a type of short-term US debt security with a maturity of one year or less. They’re one of five types of Treasury marketable securities, which are securities that can be transferred or sold before they reach the end of their term. The Treasury Department sells T-Bills in $100 increments with a maximum purchase of $10 million in noncompetitive bids.
T-Bills are widely regarded as a safe investment, as they’re backed by the full faith and credit of the US government.
4, 8, 13, 17, 26 and 52 weeks
Fixed at auction
$100 to $1,000
$10 million in noncompetitive bids
Federal tax due on interest earned
No state or local taxes
Treasury Bills vs. bonds
Treasury Bills are a type of short-term debt security issued by the US government, while bonds are a long-term debt security issued by governments and corporations.
Pros and cons of treasury bills
Near zero-risk since T-Bills are backed by the US government
Low investment minimum of $100
Fixed interest rate means stable income
No state or local taxes on interest income
Purchase T-Bills through the Treasury Department or through a bank or broker
T-Bills pay no interest leading up to maturity, only at maturity
Fixed interest rate means interest rate risk, so their rate could fall out of favor during periods of rising interest rates
With a low risk of default, low investment minimum and short time horizon, T-Bills may be an appealing place to invest. In an environment where shorter-term yields are higher than longer-term yields, T-Bills may be even more attractive. But they don’t come without disadvantages. Periods of rising interest rates may make existing T-Bills less attractive, but this won’t matter if you plan to hold the bill until maturity.
Frequently asked questions about T-Bills
Treasury Bill interest rates fluctuate and are fixed at auction. According to TreasuryDirect data as of March 6, 2023, the yield for a 52-week Treasury Bill issued on February 23, 2023 is 5.046%.
The interest income earned from T-Bills is subject to federal income tax but not state or local taxes. Interest earned on a T-Bill is paid at maturity and thus tax-reportable in the year in which it's received.
You can hold a T-Bill until maturity or sell it early without penalty. However, T-Bills pay interest only at maturity and only investors who hold a T-Bill to maturity are guaranteed to receive the face value of the bill. Because T-Bill prices fluctuate, investors who sell a T-Bill before it matures may get an amount different from what they paid. For example, if interest rates have risen since the bill was purchased, you may have to sell at a loss. The reason for the loss? Your existing T-Bill with the lower rate becomes less attractive compared to new T-Bills issued at higher rates. On the other hand, you may be able to sell at a premium if interest rates have fallen.
A Treasury Bill is a short-term debt security issued by the US Treasury Department. Investors who hold a T-Bill until maturity are paid the face value of the bill, which could be more than what they paid for it. This difference is the T-Bill's interest rate.
A Treasury Bill can be a good investment if you seek safety and a stable return.
Matt Miczulski is an investments writer at Finder, where he covers market news and digs into brokerages and investments to help readers make informed financial decisions. His expertise and writing have been featured on CBS, MSN, Best Company and Consolidated Credit, among others. Before joining Finder, Matt covered everything from finance news and banking to debt and travel for FinanceBuzz. He earned a BA in history from William Paterson University.
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