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Treasury Bills (T-Bills)

Treasury bills (T-Bills) are short-term debt securities issued by the U.S. Department of the Treasury with maturities ranging from a few days to one year. T-Bills are sold at a discount to their face value, and investors receive the full face value at maturity. The difference between the purchase price and the face value represents the investor’s return. T-Bills are considered low-risk investments because they are backed by the U.S. government.

Example

An investor buys a $10,000 T-Bill for $9,800. At maturity, the investor receives $10,000, earning $200 as the return on the investment.

Key points

• Short-term debt securities issued by the U.S. government.

• Sold at a discount to face value, with the difference being the return.

• Low-risk investments backed by the U.S. Treasury.

Quick Answers to Curious Questions

They are backed by the full faith and credit of the U.S. government, making them one of the safest investment options.

Investors earn the difference between the purchase price (discount) and the face value received at maturity.

T-Bills have maturities ranging from a few days up to one year, with the most common maturities being 4, 13, 26, and 52 weeks.

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