How to buy treasury bills?(4 easy ways in 2023)

TreasuryDirect is a popular platform for purchasing treasury bills, but some investors and retirement savers prefer alternative options for buying bonds. These alternatives, such as the secondary market or exchange-traded funds, offer greater convenience and liquidity compared to Treasury Money Market Accounts. In this article, we will guide you on how to buy treasury bills?.

Unlike typical online platforms, TreasuryDirect does not support opening tax-advantaged accounts or IRAs. However, it does enable direct purchases of treasury bills and bonds from the US government.

If investors wish to sell their bonds before their maturity date, they must first transfer their holdings to a brokerage or bank.

Apart from TreasuryDirect, investors have the option to acquire bonds through the secondary market, money market accounts, and exchange-traded funds.

By utilizing the secondary market, investors can purchase bonds and hold them within their retirement accounts or IRAs. Another avenue for bond acquisition is through exchange-traded funds, which allow investors to buy bonds conveniently.

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How to buy treasury bills on TreasuryDirect?

Investors have the option to buy bonds and treasury bills directly through TreasuryDirect, an online platform. This user-friendly platform enables individuals to purchase different types of securities like Treasury bills, bonds, and FRNs. To begin using TreasuryDirect, investors need to log in to the platform.

Apart from selecting the specific securities they wish to invest in, investors can also determine the amount they want to allocate for their purchases. The platform grants investors the ability to carefully review their orders before submitting them, ensuring a thorough and informed decision-making process.

How much does it cost to buy Treasury bills?

Treasury bills are available for purchase at a discounted price, providing buyers with a profitable opportunity. When acquiring these bills, investors pay less than their face value. For example, a $1,000 bill may be obtained for approximately $950.

Due to the backing of the US government, Treasury bills carry no risk of default, making them highly reliable. Moreover, they have a low minimum investment requirement of $100. Additionally, the interest income from these bills is exempt from local and state income taxes. With the secondary bond market facilitating easy buying and selling, investors can leverage the reduced risk associated with holding Treasury bills.

How to Participate in Treasury Auctions?

Through regular auctions held throughout the year, investors can participate in the process of buying Treasury debt securities. In 2021, over 430 public auctions were conducted for over $17 trillion in bonds.

The first step in the process of conducting an auction is to announce the schedule of upcoming events, which usually takes around four to five business days prior to the auction’s scheduled date. The details of the auction, such as the amount of security that will be offered, the terms and conditions, and the deadlines for non-competitive and competitive bidding, are revealed in the announcement.

How to Transfer Treasuries Through TreasuryDirect?

After the bonds are issued, investors have the option to hold onto them until they reach maturity or decide to sell them. If they choose to sell the bonds through TreasuryDirect, they must first transfer the assets to a bank, brokerage, or dealer.

To initiate the transfer of assets out of TreasuryDirect, investors need to complete a Transfer Request Form either online or in person. The form should include essential information such as the bank’s routing number and any specific instructions for handling the transfer.

To redeem a savings bond online, individuals can visit the “Current Holdings” page and select the “Redeem” button. They will be prompted to provide details for the redemption, including the desired amount and the destination for the payment.

If the online platform does not offer the option to redeem bonds, it indicates that there are no eligible bonds for that particular process. In such cases, individuals can redeem their paper bonds at any financial institution in the country.

What are the other ways to buy treasury bills?

In addition to purchasing bonds, there are alternative methods for investing in Treasuries. These include money market accounts, exchange-traded funds (ETFs), and the secondary market.

If you’re interested in buying Treasuries as ETFs, many brokerages allow investors to trade them similar to stocks. These ETFs can be bought and sold without incurring commissions. Popular bond ETFs often focus on different maturity lengths, ranging from short-term to long-term.

Money market mutual funds offer another avenue for investing in Treasury bills. These funds have low fees and provide relatively low yields for short-term Treasuries. The Treasury Department’s Financial Research division oversees the investments made by money market mutual funds and financial institutions in the United States.

Purchasing Treasuries in the secondary market, contrary to common belief, is not as difficult as it may seem. Most brokerages permit their customers to buy and sell bonds without charging any fees. Investing in US government bonds through the secondary market can help you avoid the fees associated with money market accounts and ETFs.

This approach also offers the advantage of holding bonds in retirement or tax-free accounts, making it easier to sell them when the timing is right.

Characteristics of a Treasury Bills

Issued inElectronic form only
Maturity4, 8, 13, 17, 26, and 52 weeks
Interest rateFixed at auction. For bills, “interest” is the difference between what you paid and the face value you get when the bill matures.
Interest paid When the bill matures
Minimum purchase$100
In increments of$100
Maximum purchase$10 million (non-competitive bid)
35% of offering amount (competitive bid)
Auction frequencyEvery four weeks for 52-week bills
Weekly for 4, 8, 13, 17, 26-week bills
No regular schedule for Cash Management Bills
TaxesFederal tax due on interest earned
No state or local taxes
Eligible for STRIPS?No

Auction calender pdf

Difference between Treasury Bonds vs. Treasury Notes vs. Treasury Bills

Treasury BondsTreasury NotesTreasury Bills
Treasury bonds are financial instruments issued by the US government to borrow money from individuals and institutions. They are like IOUs that the government promises to repay with interest over a specified period, typically 20 to 30 years. As a college student, think of it as lending money to the government and receiving regular interest payments in return. The longer the bond’s maturity, the higher the risk that interest rates might go up, but you’ll still receive a fixed interest rate throughout the bond’s life. It’s a way for the government to raise funds and for investors to earn a steady income.Treasury Notes are a type of investment where you lend money to the US government and they pay you back with interest after a certain period, typically 2 to 10 years. It’s a safe way to grow your savings as they are backed by the government and offer a fixed interest rate.

Treasury Bills, or T-Bills, are a safe investment offered by the US government. When you buy a T-Bill, you’re lending money to the government for a short period. They promise to pay you back the full amount you invested, plus interest, when the T-Bill matures. T-Bills are sold at a discount and have different maturity periods, typically ranging from a few weeks to a year. They are a low-risk option for investors looking to preserve their capital and earn a guaranteed return.

Learn step by step how to buy treasury bills


Is there a fee to buy Treasury bills?

You can buy newly issued US Treasury bonds through your brokerage or bank, or you can do so through the TreasuryDirect portal, which provides commission-free purchases.

What is the 6 month Treasury bill rate?

6 Month Treasury Bill Rate is at 4.66%, compared to 4.65% the previous market day and 0.40% last year.

Can you buy Treasury bills at a bank?

You can buy Treaury securities through a bank, a broker, or dealer.

Are Treasury bills safe?

The US government’s Treasury securities are backed by the US government and are thus an ideal investment.

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