How to Buy Treasury Bills

Rates on short-term bills are generous, with no risk.

The image of the Statue of Liberty on a bill from the Treasury.
(Image credit: Getty Images)

In the past two years, yields in the Treasury market have risen notably, and short-term investments, such as Treasury bills, have been offering especially high yields. “With the Federal Reserve raising rates, high-quality bonds are now offering much higher yields,” says Mike Mulach, senior analyst, fixed-income manager research for Morningstar. “You don’t actually have to take on much risk today to get pretty attractive yields.” 

Treasury bills, also known as T-bills, have maturity dates of one year or less and are “one of the safest products there is,” says Ken Tumin, founder of DepositAccounts.

How they work

T-bills work differently than longer-term fixed-income investments, which pay interest semiannually until maturity. You buy T-bills at a discount from the face value — known as the price before par. Your interest is the difference between the discounted price and the par value at maturity. For example, if you paid $960 for a $1,000 T-bill that matures in one year, you would earn $40 in interest, for a yield of 4%. 

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You can only buy T-bills in electronic form, either from a brokerage firm or directly from the government at (You can also buy Series I savings bonds through The most common maturity dates are four weeks, eight weeks, 13 weeks, 26 weeks and 52 weeks. For newly issued T-bills, the minimum purchase is $100 and the securities are sold in increments of $100.

New issues are sold at auction, and to participate, you must sign up with your broker or at Auctions happen every four weeks for 52-week T-bills and weekly for shorter-term T-bills. (See below for more info on buying T-bills in the secondary market.) Although interest earned on T-bills is taxed at the federal level, it’s exempt from state and local taxes.

Typically, Treasury notes and bonds, which have longer maturities, pay higher yields than ultra-short T-bills. But the Federal Reserve’s interest rate hikes have been so aggressive that for more than a year now, two-year notes have sported higher yields than 10-year bonds. Recently, the yield curve (the graph that shows the difference between short-term and long-term rates) inverted even more, as the yields of ultra-short T-bills exceeded the payouts on longer-dated debt. The interest rate on four-week bills, as of August 2023, is 5.25%, which is almost twice the rate it was selling at last year. While the yields on five-year, seven-year and 10-year bonds sits at 4.30%, 4.15%, and 4.27% respectively. 

But shorter-term yields will likely dip again, particularly if the Fed decides to pause on future rate hikes, said Greg McBride, chief financial analyst for “Although longer-term Treasury yields are much lower than shorter-term yields, you’ll soon start to see interest rates begin to ease back on Treasuries maturing in two years and less,” he says.

Secondary markets

If you’re unimpressed with T-bill yields in the primary market, you may be able to get slightly better yields by buying them in the secondary market through your brokerage firm. You’ll have to deal with the bid-ask spread, which is the difference between the highest price a buyer is willing to pay (the bid) and the lowest a seller is willing to accept (the ask). And your broker may require a higher minimum investment than the $100 required for bills purchased through 

Brokers may charge you a sales commission, too. Some brokerage firms provide additional services that could help you maximize your T-bill earnings, Tumin of DepositAccounts says. For example, you can stagger your T-bill purchases so that they each mature in three months, creating a ladder similar to what many savers use when they invest in certificates of deposit. You can also arrange to have your T-bill proceeds automatically roll over into a new T-bill upon maturity. 

Although yields on T-bills are much higher than they were in recent years, you may still be able to find better yields elsewhere, without taking on a lot more risk. Some of the top-yielding 1-year CDs, for example, are paying interest of 5% or more. Even with the state and local tax exemption available for T-bills, CDs may be a good option, depending on your situation, McBride says. 

Parking your cash in a money market fund that tracks the performance of Treasury yields, such as Vanguard Federal Money Market Fund (symbol VMFXX), which recently yielded 4.8%, may provide competitive returns as well. 

Finally, if you think you may need your funds at a moment’s notice, a high-yielding online savings account may be a better place to park your money. Some of those accounts currently pay interest rates of as much as 5%. 

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Emma Patch
Staff Writer, Kiplinger's Personal Finance

Emma Patch joined Kiplinger in 2020. She previously interned for Kiplinger's Retirement Report and before that, for a boutique investment firm in New York City. She served as editor-at-large and features editor for Middlebury College's student newspaper, The Campus. She specializes in travel, student debt and a number of other personal finance topics. Born in London, Emma grew up in Connecticut and now lives in Washington, D.C.