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RESEARCH CENTER

Treasury Bills In Depth

Treasury bills, or T-bills, are typically issued at a discount from the par amount (also called face value). For example, if you buy a $1,000 bill at a price per $100 of $99.986111, then you would pay $999.86 ($1,000 x .99986111 = $999.86111).* When the bill matures, you would be paid its face value, $1,000. Your interest is the face value minus the purchase price. 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.

You can buy a bill in TreasuryDirect or through a bank or broker. The table below shows the types of bills available for purchase by both means. (We no longer sell bills in Legacy Treasury Direct, which we are phasing out.)

Term TreasuryDirect Bank/or Broker
4-Week Bill Yes Yes
13-Week Bill Yes Yes
26-Week Bill Yes Yes
52-Week Bill Yes Yes
Cash Management Bills No Yes

You can bid for a bill in two ways:

  • With a noncompetitive bid, you agree to accept the discount rate determined at auction. With this bid, you are guaranteed to receive the bill you want, and in the full amount you want.
  • With a competitive bid, you specify the discount rate you are willing to accept. Your bid may be: 1) accepted in the full amount you want if the rate you specify is less than the discount rate set by the auction, 2) accepted in less than the full amount you want if your bid is equal to the high discount rate, or 3) rejected if the rate you specify is higher than the discount rate set at the auction.

To place a noncompetitive bid, you may use TreasuryDirect, or a bank or broker.

To place a competitive bid, you must use a bank or broker.

Key Facts:

  • Bills are sold at a discount. The discount rate is determined at auction.
  • Bills pay interest only at maturity. The interest is equal to the face value minus the purchase price.
  • Bills are sold in increments of $100. The minimum purchase is $100.
  • All bills except 52-week bills and cash management bills are auctioned every week. The 52-week bill is auctioned every four weeks. Cash management bills aren't auctioned on a regular schedule.
  • Cash management bills are issued in variable terms, usually only a matter of days.
  • Bills are issued in electronic form.
  • You can hold a bill until it matures or sell it before it matures.
  • In a single auction, a bidder can buy up to $5 million in bills by non-competitive bidding or up to 35% of the initial offering amount by competitive bidding.

*Treasury rounds to the nearest penny using conventional mathematical rounding methods.