T-bills are shorter-term securities than Treasury bonds or Treasury notes, with a maturity date typically between four weeks and one year.
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A Treasury bill (âT-billâ) is a short-term Treasury debt security backed by the full faith and credit of the U.S. government. In terms of total (notional) value, T-bills are the most widely issued type of Treasury security. In 2025, for example, they accounted for roughly 75% to 80% of total Treasury issuance.
T-bills are shorter-term securities than Treasury bonds or Treasury notes, with a maturity date typically between four weeks and one year. T-bills were first introduced during World War I as an emergency source of federal revenue. Today, they are widely used by commercial banks and other investors (including in margin accounts) as a way to earn a return on excess funds.
The Treasury sells T-bills at a discount, with investors receiving the entire face value at maturity. For example, if a one-year T-bill is priced at $96, you receive $100 at maturity, with the $4 difference representing the interest earnedâequivalent to a roughly 4% annual return.
Compare the yields for Treasury 30-year T-bonds, 10-year T-notes, and 1-year T-bills. How do financial events line up?
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Because of the shorter maturities of T-bills, theyâre popular with investors and corporate treasurers as a cash management tool. Their shorter maturities also make the price of T-bills less sensitive to changes in interest rates compared to longer-term Treasury bonds or notesâa concept known as duration, which measures a bondâs sensitivity to interest rate changes.
As with other Treasury securities, T-bill yields are set through an ongoing series of auctions open to financial firms and some individuals.
T-bills and the front end of the yield curve
Treasury bills make up the âfront endâ of the yield curveâthe portion covering maturities of one year or less. Because of their short duration, T-bill yields tend to move closely with expectations for Federal Reserve policy, including changes in the federal funds rate.
Investors watch short-term yields for signals about where interest rates may be headed. When the front end moves sharply, it often reflects shifts in monetary policy or expectations about inflation and economic growth.
Investing in Treasury bills
T-bills are commonly used by large institutions such as banks, money market funds, and corporate treasurers as a way to manage short-term cash and earn a return on funds that might otherwise sit idle. But the Treasury has also made them increasingly accessible to individual investors. The minimum purchase amount, once $10,000, was reduced to $1,000 in 1998 as part of a broader modernization of the Treasuryâs debt issuance system, including the expansion of TreasuryDirect. It was later lowered to $100 in 2008 to further open access to individual investors.
Historically, Treasury securities have been a popular safe haven during uncertain times. Although T-bills tend to offer lower returns than Treasury bonds or notes, they still generate income and are backed by the full faith and credit of the United States government.
That safety is one reason why investors buy Treasury securities despite lower yields than those offered by corporate or mortgage-related debt. Compared with other Treasury securities, the main advantage of T-bills is their short maturity, which offers greater liquidity along with less exposure to interest rate risk.
This article was most recently revised and updated by Colin Dodds
