U.S. Markets · Fixed-income basics

Treasury Bills: A Plain-English Guide

Treasury bills are short-term U.S. government securities. Learn how a bill’s term, discounted price and auction result fit together before comparing one with another place to hold cash.

WSDK Markets Guide · Published October 27, 2026 · 6 minute read

A Treasury bill, often called a T-bill, is a marketable security with a term of one year or less. Unlike a Treasury note, it does not send a regular coupon payment. Bills are generally sold below face value; at maturity, the holder receives the face value. The difference between the purchase price and face value is the bill’s interest.

A simple example of discount pricing

Suppose a bill has a $1,000 face value and its auction price means you pay $990. If you hold it to maturity, Treasury pays $1,000. The $10 difference is the interest earned before taxes and any fees. This is only an illustration; actual prices and yields are set at auction and change over time.

The bill’s term matters. A return earned over a few weeks is not the same thing as an annual return. When comparing a bill with a bank account or another security, check that you are comparing the same time period and the same type of annualized yield. TreasuryDirect explains the bill pricing formula and shows how discount rates relate to price.

What happens at an auction

The Treasury announces details such as the security term, auction date, issue date and maturity date. At the auction, bidders may submit noncompetitive or competitive bids. A noncompetitive bidder agrees to accept the result determined by the auction; TreasuryDirect accepts noncompetitive bids from individual account holders. Competitive bids specify an acceptable rate or yield and are generally placed through a bank, broker or dealer. Read the current auction instructions before placing any order.

All successful bidders in an auction receive the same auction result under Treasury’s auction process. The amount paid is taken on the security’s issue date, which may differ from the auction date. The maturity date is when the bill is payable. Check both dates against when you expect to need the money.

How bills differ from notes

Term is the basic distinction. Treasury bills mature in a year or less. Treasury notes have longer terms and pay interest every six months. A bill’s return comes from the difference between the price paid and face value at maturity, rather than periodic coupon checks. These structures can make the cash flow look different even when two securities display similar annualized yield figures.

Before you buy, check these details

Term and maturity: identify the exact maturity date, not just the week count.
Purchase price and yield: use the auction result or brokerage preview to understand what you pay and the return measure being shown.
Funding date: confirm when money will leave the linked account and whether you need the funds available then.
Access before maturity: bills can be sold before maturity, but the sale goes through a bank, broker or dealer. The process depends on where the bill is held, and the sale price can differ from your purchase price.
Fees and account rules: review any brokerage charges, transfer steps, reinvestment settings and account-specific limits.
Taxes: TreasuryDirect says bill interest is subject to federal tax and exempt from state and local income taxes. Check current official guidance or ask a tax professional about your own situation.

Finding the official information

Use TreasuryDirect for the bill terms, auction announcements, results and pricing explanations. For a specific offering, read its announcement and then compare the final auction result with the purchase confirmation. A quoted yield is only one input; it does not describe your cash needs, tax situation, fees or every risk of selling early.

For more on reading U.S. company filings, see WSDK’s earnings report guide. If you are purchasing through a brokerage, our T+1 settlement explainer introduces the standard settlement cycle for many U.S. securities; Treasury auction issue dates are listed separately in each offering.

Quick read: a T-bill is a short-term security that generally pays its return at maturity. Verify the term, price, yield convention, funding date, maturity date, fees and early-sale process before deciding whether it fits a particular purpose.

Sources and further reading

This guide is general educational information, not a recommendation to buy, sell or hold a security. Auction schedules, terms and account procedures can change; check the current TreasuryDirect announcement and your institution’s terms.

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