Treasury Bills — TreasuryDirect (2024)

FAQs

Why am I losing money on Treasury bills? ›

Treasury bonds, Treasury notes, or Treasury bills sold before their maturity date could mean a loss, depending on bond prices at the time of the sale. Simply put, the face value is only guaranteed if the Treasury is held until maturity.

Pros and Cons of T-Bills

However, should interest rates rise, the existing T-bills fall out of favor since their return is less than the market. For this reason, T-bills have interest rate risk, which means there is a danger that bondholders might lose out should there be higher rates in the future.

Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.

You can buy a bill in TreasuryDirect or through a bank or broker. The table below shows the types of bills available for purchase by both means. (We no longer sell bills in Legacy Treasury Direct, which we are phasing out.)

The federal funds rate — the lending rate between banks — can also affect T-bill prices. When lending interest rates are high, investors tend to look toward more profitable investment options, such as stocks and funds, and away from Treasury bills.

4 Week Treasury Bill Rate is at 5.00%, compared to 4.97% the previous market day and 5.28% last year. This is higher than the long term average of 1.47%. The 4 Week Treasury Bill Rate is the yield received for investing in a US government issued treasury bill that has a maturity of 4 weeks.

Buffett hasn't been a fan of bonds for a long time. He prefers equities, which offer capital-appreciation potential, and cash—mostly risk-free U.S. Treasury bills—which mature within a year. Berkshire held $235 billion of T-bills on June 30.

Bonds are generally considered a less-risky complement to the volatility of stocks in an investment portfolio. U.S. Treasurys, and specifically Treasury bills and Treasury notes, are the benchmark for a nearly risk-free investment if held to maturity.

Choosing between a CD and Treasuries depends on how long of a term you want. For terms of one to six months, as well as 10 years, rates are close enough that Treasuries are the better pick. For terms of one to five years, CDs are currently paying more, and it's a large enough difference to give them the edge.

While you can buy Treasurys like T-bonds directly from the source — the U.S. government — one of the most common ways people add them to their portfolio is by investing in Treasury exchange-traded funds or mutual funds through bank, brokerage or retirement accounts.

Are Treasury bonds safe if banks fail? ›

Bonds are considered a low-risk investment because the federal government fully backs them, not banks. They tend to be long-term investments and are considered a great way to diversify your investment portfolio.

The Bottom Line

As a rule of thumb, if a coupon rate is higher than the prevailing market interest rate, the bond's price rises; if the coupon is lower, the bond's price falls.

Maturity of T-bills

Upon maturity of the T-bills, when will I receive the principal amount? On maturity, the principal amount will be credited to your respective account by the end of the day, typically after 6pm.

Treasury Bills

Except for holidays or special circ*mstances, the offering is announced on Tuesday, the bills are auctioned on Thursday, and they are issued on the following Tuesday.

We sell Treasury Bills (Bills) for terms ranging from four weeks to 52 weeks. Bills are sold at a discount or at par (face value). When the bill matures, you are paid its face value. You can hold a bill until it matures or sell it before it matures.

When the Federal Reserve lowers its key interest rate, the federal funds rate, it creates additional demand for Treasuries, since they can lock in money at a specific interest rate. This additional demand for Treasuries leads to lower interest rates.

During the first half of a recession stage, core bond returns (i.e., Treasuries and investment-grade securities) are historically positive, while returns for high yield bonds, equities, and commodities are negative.

If a bond is held past its maturity, the federal government remains responsible for the debt. However, savings bonds that are held past their maturity date do not continue to earn interest and may actually lose value due to inflation.

Also, T-bonds are backed by the full faith and credit of the U.S. federal government, meaning investors won't lose their initial investment.