Treasury Bill Facts:
- Also called T-bills
- Short-term investment (reach full value in a few days to a year)
- Can be bought directly from the U.S. Treasury, or through banks and brokers
- Sold at a discount
When you buy a T-bill, you pay the Treasury less than what they will pay you when it matures. The bill's total value is called "face value." The difference between what you pay for the bill and its face value is the interest you earn.
Example: You bought a T-bill for $95 and its face value was $100, you would earn $5 interest by the end of the term. You can hold the bill until it reaches its full value or sell it before the end of its term.