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How to buy Treasury Bills

Learn how to buy these short-term debt obligations and diversify your portfolio.

According to Finder’s most recent Consumer Confidence Index survey, 39% of Americans are investing more conservatively compared to the prior six months. This number is up from 33% in July, when we last asked this question, and is unsurprising given the lingering uncertainty in the markets. That, and the Federal Reserve’s push to tame inflation by raising interest rates has made some conservative investments a competitive place to park your money.

Treasury Bills, one of the Treasury’s five types of marketable securities, are considered some of the safest investments available, but that safety comes at a cost. Here’s what to know before adding them to your portfolio.

What are Treasury Bills?

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 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. 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.

Term options4, 8, 13, 17, 26 and 52 weeks
Interest rateFixed at auction
Interest paidAt maturity
Minimum purchase$100 to $1,000
Maximum purchase$10 million in noncompetitive bids
Taxes
  • Federal tax due on interest earned
  • No state or local taxes

How to buy Treasury Bills

You can buy T-Bills one of two ways:

  1. 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.
  2. Through a bank or broker.

How to buy Treasury Bills through TreasuryDirect

  1. Create a TreasuryDirect account if you do not already have one.
  2. From the main menu, click on the BuyDirect tab.
  3. Select the type of Treasury securities you want to buy (in this case, Treasury Bills) and choose your desired term length.
  4. Enter the dollar amount you want to invest and click Buy Now.
  5. Confirm your Treasury Bill purchase.
  6. Fund your TreasuryDirect account by transferring funds from your bank account or by payroll direct deposit.

Once you have purchased Treasury Bills through TreasuryDirect, you can access and manage them through your account. You can also choose to reinvest or redeem your holdings when they mature, or sell them before they mature.

How to buy Treasury Bills through a bank or broker

While the exact process will vary slightly, the following are general steps to buy T-Bills through a broker:

  1. Navigate to the bonds section of your broker’s trading function.
  2. Locate US Treasuries and select a term of one year or less to access available T-Bills.
  3. Consider the maturity, price and yield of the available T-Bills, and select Buy for whichever T-Bill you want to trade.
  4. Enter an order quantity, review your order and select Buy.
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Public.com Treasury Bills
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Public.com Treasury Bills
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$100
N/A
Earn a 5.3% yield with government-backed Treasury bills.
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Stocks, Bonds, Options, Mutual funds, ETFs, Cryptocurrency, Futures, Forex, Treasury Bills
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Vanguard Personal Advisor
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Vanguard Personal Advisor
Stocks, Mutual funds, ETFs, Treasury Bills
$1,000
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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)

Treasury Bills vs. Treasury Notes vs. Treasury Bonds

Treasury Bills, Treasury Notes (T-Notes) and Treasury Bonds (T-Bonds) are all types of fixed-term debt products issued by the US Treasury Department. The main difference between these debt instruments is the time to maturity and when interest is paid.

  • Treasury Bills are short-term obligations that mature anywhere between a few weeks to one year.
  • Treasury Notes are medium-term securities issued with maturities of between two and 10 years.
  • Treasury Bonds have the longest time to maturity, with terms of 20 or 30 years. Both T-Notes and T-Bonds pay a fixed rate of interest every six months until they mature, while T-Bills pay interest only once at maturity.

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

Pros

  • 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

Cons

  • 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

Bottom line

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

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