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RESEARCH CENTER

Treasury Notes In Depth

Treasury notes, or T-notes, are issued in terms of 2, 3, 5, 7, and 10 years, and pay interest every six months until they mature.

The price of a note may be greater than, less than, or equal to the face value of the note. For a full discussion of the price of a note, see Treasury Notes: Rates and Terms.

When a note matures, you are paid its face value.

Notes are sold in TreasuryDirect, and by banks and brokers. (Notes are no longer sold in Legacy Treasury Direct, which is being phased out.)

You can bid for a note in either of two ways:

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

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

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

Key Facts

  • The yield on a note is determined at auction.
  • Notes are sold in increments of $100. The minimum purchase is $100.
  • Notes are issued in electronic form.
  • You can hold a note until it matures or sell it before it matures.
  • In a single auction, a bidder can buy up to $5 million in notes by non-competitive bidding or up to 35% of the initial offering amount by competitive bidding.