T bills how does it work

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.

All bills except week bills and cash management bills are auctioned every week. We're pleased to hear from our customers regarding their satisfaction with our website. Although your browser settings don't allow you to view the website survey we're conducting, please e-mail your comments.

Treasury bills, or T-bills, are sold in terms ranging from a few days to 52 weeks. Bills are typically sold at a discount from the par amount par amount is also called face value ; rarely, they have sold at a price equal to the par amount.

When a bill matures, you are paid its par amount. If the par amount is greater than the purchase price, the difference is your interest. You can buy bills from us in TreasuryDirect. You can also buy them through a bank or broker. Once the securities mature, the government hands over the full amount of the bill. While T-bills mature at four, eight, 13, 26 or 52 weeks, t-bonds and t-notes have longer maturity times.

Notes mature at between two and 10 years while bonds mature at 30 years. Another benefit is that T-bills can be purchased in smaller amounts that many other investments. The fact that you can pick a short maturity term is another plus if you prefer to have some flexibility with your investments.