- What are the maturity terms for Treasury bills?
- What kind of interest payments will I receive if I own a Treasury bill?
- What if an auction results in a price that's not exactly to the penny?
- Can I buy any Treasury bill directly from the Treasury?
- How do I know when bills will be auctioned?
- Do you still issue bills in paper form?
- How can I place a competitive bid for a bill?
What are the maturity terms for Treasury bills?
Among bills auctioned on a regular schedule, there are six terms: 4 weeks, 8 weeks, 13 weeks, 17 weeks, 26 weeks, and 52 weeks. Another bill, the cash management bill, isn't auctioned on a regular schedule. It is issued in variable terms.
What kind of interest payments will I receive if I own a Treasury bill?
The only interest payment to you occurs when your bill matures. At that time, you are paid the par amount (also called face value) of the bill. (Bills are typically sold at a discount from the par amount, and the difference between the purchase price and the par amount is your interest.) Treasury Direct customers who reinvest a bill may receive a refund (or discount) when the bill is issued. It is possible for a bill auction to result in a price equal to par, which means that Treasury will issue and redeem the securities at par value.
What if an auction results in a price that's not exactly to the penny?
Treasury calculates auction results to the sixth decimal place. In determining the particular dollar amount an investor will pay, Treasury rounds to the nearest penny using conventional mathematical rounding methods.
Can I buy any Treasury bill directly from the Treasury?
The 4-week, 8-week, 13-week, 17 week, 26-week, and 52-week bills are available in TreasuryDirect. Cash management bills aren't.
How do I know when bills will be auctioned?
We auction 4-week, 8-week, 13-week, 17-week, and 26-week bills every week. Typically, we auction 13-week and 26-week bills on Monday, the 17-week on Wednesday, and 4-week and 8-week bills on Thursday. We auction the 52-week bill every four weeks. Cash management bills aren't auctioned according to a schedule.
For specific dates, see our Tentative Auction Schedule, which shows auction dates months in advance, or "Upcoming Auctions," which shows auctions that we have officially scheduled. (Auctions are officially scheduled only days before they are conducted.)
Also, you can sign up for e-mail notification of auctions.
Do you still issue bills in paper form?
No. All Treasury bills are now issued electronically.
How can I place a competitive bid for a bill?
By using a bank, broker, or dealer.
FAQs
Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.
What is the disadvantage of investing in Treasury bills? ›
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.
How does TreasuryDirect verify identity? ›
Security questions are used to help us confirm your identity if you forget your account number or password. As an added security measure, TreasuryDirect may require you to answer one of your security questions when you attempt to perform certain transactions.
Why would anyone bother investing in Treasury bills? ›
Treasury securities are considered the safest and most liquid investment. This makes Treasuries the perfect collateral for borrowing money.
Is it better to buy Treasuries from broker or TreasuryDirect? ›
There are several ways to buy Treasuries. For many people, TreasuryDirect is a good option; however, retirement savers and investors who already have brokerage accounts are often better off buying bonds on the secondary market or with exchange-traded funds (ETFs).
Are Treasury bills more risky than Treasury bonds? ›
If you're looking for a short-term investment with low risk, Treasury bills are a great choice. However, if you're looking for a longer-term investment that yields semiannual income with a consistent interest rate, buying Treasury bonds is likely the better choice.
Why people don t invest in Treasury bill? ›
The biggest downside of investing in T-bills is that you're going to get a lower rate of return compared to other investments, such as certificates of deposit, money market funds, corporate bonds or stocks. If you're looking to make some serious gains in your portfolio, T-bills aren't going to cut it.
Why not buy T-bills? ›
You'll still owe (some) taxes: T-bills are exempt from state and local taxes, although they are still subject to taxes at the federal level. T-bills won't reward you with regular interest payments: If you're looking for a pick-me-up in the form of a regular interest payment, T-bills aren't for you.
What is a better investment than Treasury bills? ›
Compared with Treasury notes and bills, Treasury bonds usually pay the highest interest rates because investors want more money to put aside for the longer term. For the same reason, their prices, when issued, go up and down more than the others.
What happens when a Treasury bill matures on TreasuryDirect? ›
When the bill matures, you are paid its face value. You can hold a bill until it matures or sell it before it matures.
If you invest in TreasuryDirect, your 1099 will be available electronically and you can print the form from your account. 1099 forms are available by January 31 of each tax year.
How long does TreasuryDirect take to process? ›
You just bought a security from the U.S. Treasury. Securities are generally issued to your account within two business days of the purchase date for savings bonds or within one week of the auction date for Bills, Notes, Bonds, FRNs, and TIPS.
How to ladder T-bills? ›
Here are the steps to create a ladder:
- Start with an investment policy. ...
- Establish Your T-Bill Ladder Investment Objectives. ...
- Choose Your T-Bills. ...
- Buy Your T-Bills. ...
- Reinvest Maturing Bonds. ...
- Monitor market trends and reinvest assets per your investment policy.
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.
What happens when a T-bill matures? ›
The only interest payment to you occurs when your bill matures. At that time, you are paid the par amount (also called face value) of the bill. (Bills are typically sold at a discount from the par amount, and the difference between the purchase price and the par amount is your interest.)
What is the downside of buying Treasury I bonds? ›
Key Points. Pros: I bonds come with a high interest rate during inflationary periods, they're low-risk, and they help protect against inflation. Cons: Rates are variable, there's a lockup period and early withdrawal penalty, and there's a limit to how much you can invest.
Is TreasuryDirect a good idea? ›
If you're looking for a safe place to park your cash, you may want to consider T-bills or other government securities. Since your return will be lower than the return of riskier fixed-income and equity investments, using TreasuryDirect is smart, since it cuts out the middleman — and eliminates any commissions and fees.
Is there any downside to I bonds? ›
The cons of investing in I-bonds
There's actually a limit on how much you can invest in I-bonds per year. The annual maximum in purchases is $10,000 worth of electronic I-bonds, although in some cases, you may be able to purchase an additional $5,000 worth of paper I-bonds using your tax refund.
Is a TreasuryDirect account safe? ›
Treasury securities are considered a safe and secure investment option because the full faith and credit of the U.S. government guarantees that interest and principal payments will be paid on time.
