What Is Treasury Bill?

A T-Bill, or Treasury bill, is a short-term debt obligation of the U.S. government. It is backed by the Treasury Department and has terms that range from four to 52 weeks. T-bills are issued at a discount from their face value, also known as the par value.

Treasury bills are commonly sold in $1,000 denominations, but occasionally they can go up to $5 million in non-competitive bids. The Treasury Department conducts auctions for T-bills, utilizing both competitive and non-competitive bidding methods.

How to Buy It

T-bills are used by the U.S. government to finance projects like building schools and roads. People usually keep them until they mature or cash them out early.

Newly issued Treasury bills can be bought at government auctions through Treasury Direct. Bidders, including individual investors, hedge funds, banks, and primary dealers, participate in the bidding process to determine the price. After purchasing the bills, these buyers have the option to resell them to other investors in the secondary market.

Investors have the opportunity to purchase Treasury bills through a bank or licensed broker in the secondary market. Upon completion of the transaction, the T-bill purchase acts as a confirmation from the government detailing the investment amount and bid terms.


Treasury bills offer a fixed interest rate, giving a steady income. But if interest rates go up, current T-bills may not be as attractive because their return is lower than the market. This means there is a risk of losing out on higher rates for bondholders.

  • Zero default risk since T-bills have a U.S. government guarantee
  • T-bills offer a low minimum investment requirement of $100
  • Interest income is exempt from state and local income taxes but subject to federal income taxes
  • Investors can buy and sell T-bills with ease in the secondary bond market


  • T-bills offer low returns compared with other debt instruments
  • The T-bill pays no interest payments leading up to its maturity
  • T-bills can inhibit cash flow for investors who require steady income
  • T-bills have interest rate risk, so, their rate could become less attractive in a rising-rate environment


T-bills are short-term debt obligations issued by the Treasury and are backed by the U.S. government, making them low-risk investments with relatively low returns.