How to Buy Treasury Bills on TreasuryDirect, Step by Step

A Treasury bill is a short-term loan to the United States government, and you can buy one directly from the Treasury with as little as $100. You pay less than the face value now, and the Treasury pays you the full face value when the bill matures. This guide walks through the terms, the two ways to buy, and the steps on TreasuryDirect.

Summary

Treasury bills, or T-bills, mature in 4, 6, 8, 13, 17, 26, or 52 weeks, according to TreasuryDirect. Bills are sold at a discount or at par, and when the bill matures you are paid its face value. The difference between what you paid and the face value is your interest, and it is paid at maturity.

The minimum purchase is $100, in increments of $100, and the maximum for a non-competitive bid is $10 million per auction. Interest on bills is subject to federal tax, with no state or local taxes. Cash Management Bills are a separate product sold only through a bank, broker, or dealer, not in TreasuryDirect.

T-Bill Terms at a Glance

Term	Auction rhythm	Fits
4, 6, 8 weeks	Weekly	Short cash you need soon
13, 17, 26 weeks	Weekly	Savings for a goal a few months out
52 weeks	Every four weeks	Money you can set aside for a year

The table shows the trade-off in one line. Shorter terms are auctioned weekly, so you can place a bid almost any week, and your money comes back soon. The 52-week bill is auctioned only every four weeks, so check the auction calendar before you plan around it.

Pick the term by the date you need the money back, not by the rate. The rate is set at auction, and you do not know it when you place the bid.

Two Ways to Buy

TreasuryDirect

TreasuryDirect is the Treasury's own online account for buying and holding government securities, with no broker in the middle. In TreasuryDirect you place non-competitive bids only, which means you agree to accept the discount rate the auction sets.

To bid, go to your TreasuryDirect account, choose the BuyDirect tab, and follow the prompts to choose the security, specify the amount, and fill in the required information. You need a TreasuryDirect account and a linked bank account before you can bid.

Good fit if: you want to buy directly from the Treasury and hold the bill to maturity.

Bank or Broker

You can also buy bills through a bank, broker, or dealer, which is the route for competitive bids and for Cash Management Bills. A competitive bid lets you name the lowest rate you will accept, but it may not be filled if the auction clears below that rate. A broker may also offer bills that have already been issued, on the secondary market.

Check the broker's fee schedule before you buy, since fees and services differ from firm to firm.

Good fit if: you want to trade before maturity or you already keep your savings at a brokerage.

What a $10,000 Bill Costs

The math uses the discount rate, which is set at auction, so this example uses a hypothetical rate to show the arithmetic. Take a 13-week bill, which runs 91 days, at a hypothetical discount rate of 4.00%. The amount below face value per $100 is the discount rate times the days divided by 360. That is 4.00 times 91 divided by 360, or $1.01, so the price is about $98.99 per $100 of face value.

For $10,000 of face value, you pay $9,898.89. At maturity you receive $10,000, so the interest is $101.11. The investment rate is the interest divided by the price, times 365 divided by the days: $101.11 divided by $9,898.89, times 365 divided by 91, or about 4.10%.

The assumptions are a 4.00% discount rate and a 91-day term. Bill pricing uses a 360-day year, while the investment rate uses a 365-day year. A real auction will set a different rate, so run the same arithmetic with the rate from the auction result.

Auction results are posted on the auction day, so check the TreasuryDirect announcements page for the timing. Also note that securities bought in TreasuryDirect carry a minimum holding period of 45 calendar days before they can be transferred or sold, so a 4-week bill bought there is one you plan to hold to maturity.

Choosing Order

Open a TreasuryDirect account and link a bank account, and check the auction calendar for the term you want.
Place a non-competitive bid before the auction deadline: choose the BuyDirect tab, pick bills and the term, enter the amount in $100 steps, and confirm the funding source.
Check the auction result, confirm the price, and make sure the linked bank account can cover the purchase before the issue date.

Before You Buy

Pick the term by the date you need the money back, and remember the 52-week bill is auctioned only every four weeks.
Confirm the amount is a multiple of $100, starting at the $100 minimum.
Know that the rate is set at auction, so do not plan around a rate you saw last week.
Check that your linked bank account holds enough money before the issue date.
Remember that interest is taxed at the federal level and exempt from state and local tax, and keep the auction result for your tax records.
If you may need to sell before maturity, consider a broker, and read the TreasuryDirect holding-period rules first.

This article is for general information, not financial advice.