If you are looking for a low-risk way to grow your money, Treasury bills might be worth a closer look. They are simple, backed by the U.S. government, and right now, they are offering some pretty decent returns. If this is your first time hearing about T-bills, do not worry — I will walk you through everything in plain, everyday language.
What is a treasury bill, and how does it work?
A Treasury bill, or T-bill, is basically a short-term loan you give to the U.S. government. In return, the government agrees to pay you back in full — with a little extra — after a set amount of time.
Here is how it works:
- You buy a T-bill at a price lower than its full face value (called “par value”).
- When it matures — in as little as 4 weeks or as long as 52 weeks — you get the full face value back.
- The money you earn is the difference between what you paid and what you get back.
Example:
If you pay $970 for a 1-year T-bill with a face value of $1,000, you make $30 in profit after a year. That is your interest.
Why are treasury bills considered safe?
T-bills are backed by the full faith and credit of the U.S. government. That means the chance of you not getting paid back is basically zero. For this reason, a lot of people — including big investors like Warren Buffett — use them as a safe place to park cash, especially when the market feels uncertain.
What is the minimum amount to invest in t-bills?
You do not need thousands of dollars to get started. Here is what you need:
- Minimum investment: $100
- You can buy in increments of $100
- Maturity terms include: 4 weeks, 8 weeks, 13 weeks, 26 weeks, and 52 weeks
This makes it accessible whether you are just starting out or have more to invest.
Where can I buy treasury bills?
You have two main options:
1. TreasuryDirect.gov (Direct from the U.S. Government)
- Open a free account
- Go to “BuyDirect”
- Choose the type of bill and how much you want to invest
- Link your bank account for funding
- Pick if you want to reinvest when it matures
- Submit and wait for the auction date
2. Through a brokerage firm (like Fidelity, Charles Schwab, etc.)
- Often easier if you already have an account
- Some brokers let you buy on the secondary market (from other investors)
- May require a higher minimum or charge a small fee
What is the interest rate on treasury bills?
Rates can change weekly depending on the market. As of late June 2025, the yield for 4-week bills was around 4.16%, which is pretty competitive when compared to savings accounts or short-term CDs.
Keep in mind:
- Interest is paid all at once at maturity
- There are no monthly payments
- Your interest is subject to federal taxes, but exempt from state and local taxes
What are the pros and cons of investing in t-bills?
Pros:
- Very low risk
- Fixed return at maturity
- Easy to buy online
- Good option for short-term savings goals
- No state or local tax on interest earned
Cons:
- Returns are lower than riskier investments like stocks
- You may earn less if inflation is high
- Your money is locked in until maturity (unless you sell early through a broker)
How do treasury bills compare to CDs or savings accounts?
T-bills are often compared to one-year CDs or high-yield savings accounts. Right now, some CDs offer similar interest rates, and they also give fixed returns.
But here is what makes T-bills stand out:
- No state or local taxes on interest
- Backed by the federal government
- More flexible purchase terms (4–52 weeks)
If you think you might need quick access to your money, a high-yield savings account might be better. But if you can lock your money in for a short time, T-bills are a smart option.
Can i sell my t-bills early?
Yes — if you buy them through a broker. This is called the secondary market. Just know that:
- You might not get the full face value if rates change
- Brokers may charge fees
- The bid-ask spread can affect how much you get back
If you buy through TreasuryDirect, you generally have to wait until maturity to get your money back.
How do interest rates and inflation affect t-bill returns?
T-bill yields tend to move with interest rates set by the Federal Reserve. When rates go up, new T-bills pay more. When rates fall, the yields go down.
Inflation also matters. If inflation is higher than your T-bill’s return, your money loses buying power. So, it is important to watch inflation trends if you plan to invest regularly in T-bills.
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