That simple picture is why treasury bills sit at the centre of cash management for banks, companies and millions of everyday savers. If you have money you will need within a year and you do not want to gamble with it, bills deserve a close look.
In this guide you will learn what a T-bill is, why it matters, how to buy one step by step, a worked example with real numbers, and the mistakes beginners make most often. All yields are taken from the official US Treasury daily rates page, checked on 11 October 2026.
The official TreasuryDirect page for Treasury bills, captured 11 October 2026.
What Are Treasury Bills?
A Treasury bill, usually shortened to T-bill, is a short-term loan you make to a national government. In return, the government promises to pay you back the full face value on a set date. US bills are the global benchmark, and many countries run similar programmes under names such as treasury bills or government bills, so the ideas here carry across borders.
Bills are sold at a discount. You might pay $9,800 today for a bill that pays $10,000 in six months. The $200 difference is your interest. TreasuryDirect, the US government's retail platform, describes it this way: for bills, interest is the difference between what you paid and the face value you get when the bill matures.
Unlike a regular bond, a bill pays no coupons along the way. Everything arrives in one payment at maturity. That makes the maths clean and the cash flow predictable.
US bills mature in 4, 6, 8, 13, 17, 26 or 52 weeks. Anything longer is a note or a bond, which behaves quite differently when interest rates move. If you want that wider picture, read our bond investing beginners guide after this one.
Why Treasury Bills Matter for Your Money
Bills matter because they combine three things that are hard to find together: very low credit risk, short duration and a market-based yield. A government that borrows in its own currency is widely viewed as the safest borrower in that currency, so bills are the usual reference point for a risk-free rate.
They also protect you from the biggest danger of longer bonds. When rates rise, the price of a long bond falls sharply. A bill that matures in a few weeks has almost no time left to be hurt, which is why we explain the risk in our guide to bond duration.
$100 is the minimum purchase on TreasuryDirect, in steps of $100.
Finally, bills help you beat idle cash. Money left in a low-interest account loses ground to rising prices, a problem we cover in inflation explained. On 9 October 2026 the 52-week bill yielded 4.46% on the coupon equivalent basis, according to the US Treasury.
Bills are not a growth investment. They will not build wealth the way stocks can over decades. Their job is to hold money you cannot afford to lose while still paying you something for the wait.
How to Buy Treasury Bills Step by Step
Buying a bill is easier than most beginners expect. You can go direct to the issuer or use a broker you already have. Here is the process using the US system as the example. Other countries follow the same pattern through their own debt agency or through banks.
Step 1: Decide how long you can lock the money
Match the maturity to a date you know. Rent due in 13 weeks, a tax bill in 26 weeks, a deposit on a car in 52 weeks. A bill that matures just before you need the cash removes guesswork. Money you might need tomorrow belongs in your emergency fund, not a locked bill.
Step 2: Pick where to buy
TreasuryDirect sells bills straight from the US Treasury with no commission. Brokers also offer them, often with easier selling before maturity and the ability to hold bills next to your other investments. Cash Management Bills, a special variable-term product, are only sold through a bank, broker or dealer, according to TreasuryDirect.
Step 3: Choose a bid type
At auction you can place a non-competitive bid or a competitive bid. A non-competitive bid simply accepts whatever rate the auction sets, and it is the right choice for nearly every beginner. TreasuryDirect allows up to $10 million this way. A competitive bid names the rate you want and risks getting nothing if it is too low, with a cap of 35% of the offering.
Step 4: Enter your amount and wait for the auction
Enter an amount in multiples of $100. Bills with 4, 6, 8, 13, 17 and 26 week terms are auctioned weekly, while 52-week bills are auctioned every four weeks. The rate is fixed at auction, so what you see is what you earn.
Step 5: Collect at maturity, or roll over
Interest is paid when the bill matures. You can let the money return to your account, or reinvest it in a new bill. Many savers reinvest so the cash keeps working without a new decision each time.
4.03% to 4.46% was the range of coupon equivalent yields across all seven bill maturities on 9 October 2026.
US Treasury daily bill rates for 6 to 9 October 2026, captured 11 October 2026.
Treasury bill yields by maturity, 9 October 2026 (coupon equivalent)
Source: US Department of the Treasury daily bill rates. These are secondary market quotations, so the rate you get at auction will differ slightly.
Notice the slope. Longer bills pay a little more, which is the market asking for extra reward in return for tying money up. The gap between 4 weeks and 52 weeks is only 0.43 percentage points, so the extra wait buys a small premium.
Bank discount versus coupon equivalent
You will see two numbers for every bill. The bank discount rate is based on face value and a 360-day year. The coupon equivalent, also called the investment yield, uses the price you actually pay and a 365-day year. Treasury says the coupon equivalent is the figure to use when you compare a bill with a regular interest-paying security. For comparing against a savings account, use the coupon equivalent.
A Worked Example With Real Numbers
Say you have $10,000 and want to park it for 26 weeks. TreasuryDirect gives the pricing formula: price equals face value times one minus the discount rate times days, divided by 360.
Using the 26-week bank discount rate of 4.18% quoted on 9 October 2026, and 182 days, the price is about $9,788.68. At maturity you receive $10,000, so your interest is $211.32. That works out to the 4.33% coupon equivalent yield the Treasury published for the same day.
$211.32 earned on $10,000 over 26 weeks, with no stock market risk along the way.
Treasury's own example uses a $1,000 26-week bill at a 0.145% discount rate that sells for $999.27, which shows how rates in other years looked very different. Rates change with central bank policy, so always check the current figure before you buy.
Real Examples: Three Ways People Use Bills
The ladder. Imagine you split $12,000 into four equal parts and buy bills maturing in 13, 26, 39 and 52 weeks, roughly. As each one matures you roll it into a new 52-week bill. After a year, a bill matures every quarter, which gives you regular access to cash and steady exposure to current rates. This is an illustration, not a prediction of returns.
The tax pot. A freelancer who owes a tax payment in 26 weeks can buy a bill that matures a few days before the due date. The money is safe, the interest is known in advance, and the payment is covered.
The cash buffer inside a portfolio. An investor who wants dry powder for market dips can hold part of the portfolio in 4-week bills, which stay close to cash but earn a market rate. If you are weighing this against a bank account, see our high-yield savings account guide.
How bills compare with other places for cash (general pattern)
Common Mistakes With Treasury Bills
Mistake 1: Comparing the wrong rate
A bank discount rate of 4.18% looks lower than a savings account at 4.30%, but the investment yield on that bill was 4.33%. Compare like with like, using the coupon equivalent.
Mistake 2: Using bills for long-term goals
Bills are built for money you need in a year or less. If you are saving for retirement in 25 years, an index fund has historically had more room to grow, though with larger swings. Our dollar cost averaging guide shows one way to build that kind of investment.
Mistake 3: Locking up money you may need
You can sell a bill before maturity, but the price you get depends on rates that day. For a short bill the swing is small, yet it is still not the same as cash. Keep an emergency fund separate.
Mistake 4: Ignoring tax rules
In the US, bill interest is subject to federal tax but not state or local tax, according to TreasuryDirect. Other countries treat government bill interest differently, so check the rules where you pay tax before you assume the return is what you see.
Mistake 5: Buying through an unofficial website
Only use the official government platform, or a regulated broker or bank. Look-alike sites exist, and a bill needs no special fee to purchase from the issuer.
TreasuryDirect explains how a bill's price and interest are calculated, captured 11 October 2026.
Frequently Asked Questions
Are treasury bills safe?
US bills are backed by the full faith and credit of the US government and are seen as among the lowest-risk investments available in dollars. Safe does not mean returns are guaranteed to beat rising prices, so inflation is still the main risk.
How much do you make on a $10,000 treasury bill?
It depends on the maturity and the rate at auction. In the worked example above, a 26-week bill earned about $211 on $10,000. A 52-week bill at the 4.46% coupon equivalent yield would earn roughly $446 over the year, before tax.
How to buy treasury bills for beginners?
Open an account on the government platform or with a broker, choose a maturity, place a non-competitive bid in multiples of $100, and wait for the auction. Interest arrives at maturity.
Can you lose money on a treasury bill?
If you hold to maturity you receive the face value, so the gain is known in advance. If you sell early, the market price could be a little lower or higher than your purchase price.
Key Takeaways
- A treasury bill is a short-term government loan sold at a discount, paying face value at maturity.
- US bills mature in 4, 6, 8, 13, 17, 26 or 52 weeks, with a $100 minimum on TreasuryDirect.
- On 9 October 2026 yields ranged from 4.03% to 4.46% on the coupon equivalent basis.
- Use the coupon equivalent yield when you compare bills with savings accounts.
- Non-competitive bids are the simple, beginner-friendly way to buy at auction.
- Bills suit money you need within a year, not long-term growth.
- Think of the parking garage: your cash goes in, waits safely, and comes out slightly larger.
What to Watch Next
- v Does the 52-week yield stay above the 4-week yield (4.46% versus 4.03% on 9 October)?
- v Does the next weekly auction price the 26-week bill near its 4.33% coupon equivalent?
- v Does your central bank change its policy rate at the next meeting, and do bill yields follow?
- v Do your local tax rules on government bill interest change before your bill matures?
References
This article is educational and is not financial advice. Check current rates and your local tax rules before investing.