A Definitive Guide to Treasury Bills (2023) (2023)

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James updated on 2022-10-17


Treasury bills are among the most popular securities for conservative investors looking for safe, low-yield investments. But how do Treasury bills, or T-bills, work and how do you buy them and take advantage of this short-term return?

Learn how to invest in Canadian or US Treasury bills, what return you can expect from this investment and what T-bills alternatives may be right for you.

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What you need to know about Treasury bills:

  • Treasury bills are a type of debt securities issued by a government.
  • The investment in a Treasury bill is secure and 100% guaranteed.
  • The investment horizon of a Treasury bill varies from one month to one year.
  • The return on Treasury bills is low and very safe
  • There are more profitable alternatives for moderately more risk

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What is a Canadian Treasury Bill?

A Canadian treasury bill is a tradable money market security issued by the Government of Canada. The government uses them to raise money from the public.

Investment profileYieldCharacteristicsTaxes
  • Secure investment
  • Low but guaranteed return
  • Capital gains are taxable

Canada T-Bills have a short term to maturity, usually one year or less from the date of issue. They are sold at a discount below their face value and are redeemed at face value at maturity. Unlike bonds, which earn interest, the investor's profit is solely the difference between the purchase price and the sale price of the Treasury bill.

Good to know

Sales price of the T-Bill - Purchase price of T-Bill = Treasury Bill Profit

Treasury bills also exist for other governments and are popular because they are accessible to individuals, unlike some other money market instruments.

Although the yield is lower than many other investments, T-bills are valued for their safety. They are very low risk because they are guaranteed by reputable central banks.

Investors who value safety also like Guaranteed Investment Certificates. As of late 2022, some GICs on the market are approaching a 5% guaranteed return!

Safe, guaranteed returnsCompare GICs today

How do I buy Treasury bills in Canada?

Buying T-bills is easy. There are a few ways to buy them in Canada. You can:

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  • Buy T-bills from the financial institution: it is possible to buy T-bills directly from a financial institution that issues them.
  • Buy T-bills through a broker: Online brokers and banks can also give you access to T-bills.
  • Buying T-bills through a financial advisor: Finally, if you work with a financial advisor, they will be able to help you purchase T-bills.
Online brokers$1 to $2 per orderIndependent investments
Financial institutions0%Direct investment
Financial Advisors1.5 to 3% per yearPersonalized advice Active management of investment

Good to know

Note that Treasury bills are issued in amounts of $1,000, $5,000, $10,000, $25,000, $50,000, $100,000 and $1,000,000. Therefore it requires a significant investment to acquire them. Some institutions and brokers require a minimum purchase of several thousand dollars.

Once purchased, these bills are held for a short period of time, between one month and one year. They are then automatically redeemed at maturity. All you have to do to get started investing in T-Bills is contact an online broker like CIBC or Desjardins. Alternatively, speak with a trusted financial advisor.

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What are the different types of Treasury bills?

The term Treasury bill most often refers to short-term bills. There are, however, several similar investment instruments offered by the Treasury with different times to maturity

  • Treasury bonds: These are long-term investments with a time to maturity that may be between 20 and 30 years.
  • Treasury notes: These are medium-term investments, with a time to maturity that's generally between 2 and 10 years.
  • Treasury bills: these are discussed in this article and are short-term investments. Their time to maturity is no more than one year.

How do Treasury bills work?

Treasury bills are issued through public auctions in Canada. They may be offered for sale up to twice a week.

Unlike bonds, interest rates on treasury bills do not exist. The capital gain from this investment is the difference between the purchase price and the redemption or resale price.

The Treasury bill is sold at a discount below its face value, and is then reimbursed by the issuer at that real face value.

Good to know

An example of how T-bills work:

Imagine that you purchase a $1,000 t-bill at a discounted price of $960. Once it reaches maturity the Canadian or US Treasury will pay you the full $1,000. You will have made a $40 capital gain on your investment.

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Why does the government issue Treasury bills?

Governments issue Treasury bills in order to finance their operations. They may have a deficit budget and need money to operate, particularly to pay civil servants or to finance programs and projects. These treasury bills can also be used to refinance part of their maturing debt.

Good to know

The rate of return offered by a Treasury bill varies according to the needs of the government, its ability to repay and the monetary policies of central banks.

What is the return on Treasury Bills?

See below for a chart of current and past yields of Canadian Treasury Bills:

Year1-month3-month6-month1 year

The monetary policy of the central bank of the issuing country largely determines its rates. The yield is still low for the majority of these bills, given that central banks have been pursuing a low-interest rate policy since the 2008 financial crisis. At the time of publication in 2022, this trend appears to be reversing.

Treasury bonds are low-risk investments since these securities are 100% guaranteed by the governments. As a result, their yield is also very low.

While there are more profitable investment products, what attracts investors to Treasury bills is above all the security they provide. Noted that if an investor resells a T-bill before its maturity, the return to which they were entitled will not be fully paid out.

Good to know

The return offered by a Treasury bill is considered a capital gain and is taxable.

Why buy Treasury Bills?

Buying treasury bills is essentially lending money to a government in exchange for a promising return. It is therefore a specific investment method that has certain advantages including:

  • A 100% guaranteed investment: Treasury bills are one of the safest investments on the market since they are fully backed by the issuing government.
  • Easy-to-understand products: These are also easy-to-understand securities, making them suitable even for novice investors.
  • Affordable prices: Treasury bills can be purchased for as little as $1,000.
  • Option to purchase through a broker: T-bills are products that can be purchased through a financial institution or through a broker such as an online broker.
  • A short-term investment: An investment in a T-bill is a short-term investment that lasts from a few weeks to one year. The return increases with the length of time you hold it.

That being said, other safe investments are available that can provide a higher return. If you’re interested in other investment options, you can get investment advice from our financial experts.

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(Video) How to Invest in Treasury Bills(Step by Step guide) #investing #personalfinance

How do Treasury bill auctions work?

Treasury bills are negotiable debt securities issued by the Treasury through auctions. T-Bills come with different maturities, including:

  • Short-term: maturities of 13, 26 or 52 weeks
  • Medium-term: maturities of 2 or 5 years
  • Long-term: maturities of 10 or 30 years

The Treasury intervenes in the banking system through Treasury bill auctions by slowing down or speeding up the supply and demand of liquidity. This can influence the market and securities.

What are the alternatives to Treasury bills?

There are many alternative investments to Treasury bills. If you are looking for a higher return you can turn to stocks. Diversifying your stock investments through mutual funds and ETFs offers good long-term security and growth potential.

  • Stock market shares: These are negotiable securities that represent a share of a company's capital. An investor who buys a share in effect is a partial owner of the company. Shares may be listed shared, meaning that they are openly traded on the market, or unlisted shares It is possible to buy shares via your investment account through a broker. Stocks can generate a higher return than T-bills through dividends and capital gains when you resell them.
  • Treasury bills and bonds: These are redeemable debt instruments similar to Treasury Bills but with a medium to long-term maturity. They are also issued by the Treasury. Most government bonds have a fixed rate and are redeemable at maturity.
Investment ProductYieldRiskHorizon
Treasury BillsLowZeroShort-term
StocksMedium to highMedium to highMedium or long term
Treasury BondsLowLowLong-term

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What is the time to maturity for Treasury bills?

A T-bills time to maturity is known at the time of purchase. Its duration in Canada is less than one year.

At maturity, the government that issued will pay its predetermined value. Your profit is the difference between that price and the discounted price you purchase it at.

Treasury bills have maturities of 1 month, 2 months, 3 months, 6 months or 1 year. They are easy to resell before their maturity, so they are a very liquid investment.

How to buy US Treasury Bills?

Canadian investors may also purchase US Treasury bills. There are a few ways to do this.

The most direct way is to buy them through the U.S. Treasury directly. Canadian investors with RRSPs or TFSAs may prefer to buy them on the secondary market through ETFs in order to reap the tax benefits of their registered retirement accounts.

Contracts for difference (CFDs) are complex instruments. The nature of leverage means that they are high-risk investments with the potential to lose money quickly.

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Ask a question,an expert will respond


What is the interest rate on TreasuryDirect bills? ›

The composite rate for I bonds issued from November 2022 through April 2023 is 6.89%.

What are Treasury bills paying today? ›

3 Month Treasury Bill Rate is at 4.74%, compared to 4.73% the previous market day and 0.33% last year. This is higher than the long term average of 4.17%.

How much do 1 year Treasury bills pay? ›

1 Year Treasury Rate is at 5.03%, compared to 5.04% the previous market day and 1.08% last year. This is higher than the long term average of 2.87%.

Is there a high risk for investing money in US Treasury bills? ›

Treasury bonds are considered risk-free assets, meaning there is no risk that the investor will lose their principal. In other words, investors that hold the bond until maturity are guaranteed their principal or initial investment.

Are Treasury bills worth buying? ›

T-bills are known to be low-risk short-term investments when held to maturity since the U.S. government guarantees them. Investors owe federal taxes on any income earned but no state or local tax. However, Treasury bills also earn lower returns than other debt securities and even some certificates of deposit.

What is the current 6 month T bill rate? ›

6 Month Treasury Bill Rate is at 4.94%, compared to 4.96% the previous market day and 0.66% last year.

What is the 2 year Treasury bill rate? ›

2 Year Treasury Rate is at 4.86%, compared to 4.89% the previous market day and 1.53% last year. This is higher than the long term average of 3.16%.

Can you make money with Treasury bills? ›

Like other debt instruments issued by the U.S. Treasury, T-bills are considered a safe-haven investment, known for producing reliable returns even in times of economic declines.

What is the 3 year Treasury bill rate? ›

3 Year Treasury Rate is at 4.60%, compared to 4.63% the previous market day and 1.69% last year.

Do Treasury bills lose value? ›

T-Bills Are a Safe Investment

The federal government has never defaulted on an obligation, and it's universally believed it never will. Investors who hold T-bills can rest assured that they will not lose their investment. T-Bills are considered a zero-risk investment thanks also to Treasury market liquidity.

What is the best way to buy Treasury bills? ›

You can buy T-bills online directly from the U.S. government at TreasuryDirect. Alternatively, you can also buy T-bills through a bank or broker. Bills are issued weekly through an auction bidding process.

Are Treasury bills good for retirement? ›

T-bills are one of the safest investments, but their returns are low compared to most other investments. When deciding if T-bills are a good fit for a retirement portfolio, opportunity cost and risk need to be considered. In general, T-bills may be appropriate for investors who are nearing or in retirement.

Are Treasury bills safer than CDs? ›

T-bills are more liquid than CDs but have about the same level of safety and maturity, so we would expect CDs to pay a higher rate to compensate for the difference in liquidity. However, this is not the case: In November 2022, a 12-month CD paid a rate of 0.6%, with 3- and 6-month CDs paying even less.

What are the disadvantages of investing in Treasury bills? ›

The biggest downside of investing in T-bills is that you're going to get a lower rate of return compared to other investments, such as certificates of deposit, money market mutual funds, corporate bonds, or stocks.

Are U.S. Treasuries safer than FDIC? ›

The FDIC does not insure safe deposit boxes or their contents. The FDIC does not insure U.S. Treasury bills, bonds or notes, but these investments are backed by the full faith and credit of the United States government.

What is the average return on a Treasury bill? ›

The values shown are daily data published by the Federal Reserve Board based on the average yield of a range of Treasury securities, all adjusted to the equivalent of a one-year maturity. The current 1 year treasury yield as of March 02, 2023 is 5.04%.

How much should I invest in Treasury bills? ›

Many brokers allow you to buy and sell Treasury securities within your brokerage account. However, brokers often require a minimum purchase of $1,000 for Treasury securities. You can buy most securities in $100 increments on the TreasuryDirect website.

Which is better Treasury bills or bonds? ›

Upon maturity, the investor is paid the face value of the bond.4 Treasury bonds pay the highest interest rates compared to Treasury notes and bills because investors are compensated for locking their money up for the longer term.

Are Treasury bills taxable? ›

Examples of Taxable Interest

Interest income from Treasury bills, notes and bonds - This interest is subject to federal income tax, but is exempt from all state and local income taxes.

Are T-bills affected by rising interest rates? ›

However, if interest rates are rising, existing T-bills fall out of favor since their rates are less attractive compared to the overall market. As a result, T-bills have interest rate risk meaning there is a risk that existing bondholders might lose out on higher rates in the future.

Do Treasury bills pay interest every 6 months? ›

Both bonds and notes pay interest every six months.

What is the highest 2 year Treasury yield in history? ›

The United States 2 Years Government Bond reached a maximum yield of 5.283% (28 June 2006) and a minimum yield of 0.105% (5 February 2021). Understanding ETF Options: Profitable Strategies for Diversified, Low-Risk ...

What is the 8 week T bill rate? ›

The United States 8 Week Bill Yield is expected to trade at 5.15 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations.

How much Treasury bills can I buy? ›

The most important thing to remember about purchasing marketable bills, notes, bonds, Floating Rate Notes, or TIPS is that the limits are set for each auction, not by year. The limit for noncompetitive purchases is $10 million for each security type and term, for each auction.

What is the 1 month T bill rate? ›

1 Month Treasury Rate is at 4.75%, compared to 4.75% the previous market day and 0.19% last year. This is higher than the long term average of 1.24%.

What are the pros and cons of Treasury bills investment? ›

Advantages and Disadvantages of Treasury Bills
Zero default riskHave an interest rate risk
State and local income taxes is not imposed on the interest incomeOffer lower returns
Can be bought or sold easily in the secondary marketLeading up to maturity, it does not pay any coupon interest payments
1 more row

Where to buy US Treasury bills? ›

TreasuryDirect is the official United States government application in which you can buy and hold savings bonds and Treasury marketable securities (Notes, Bonds, Bills, TIPS, and FRNs).

How long does a treasury bill last? ›

Among bills auctioned on a regular schedule, there are six terms: 4 weeks, 8 weeks, 13 weeks, 17 weeks, 26 weeks, and 52 weeks.

When was the 3 month Treasury Bill rate the highest? ›

Historically, the United States 3 Month Bill Yield reached an all time high of 13.99 in March of 1982.

Do Treasury bills keep up with inflation? ›

Treasury Inflation-Protected Securities can be a buffer against long-term inflation, but it's possible for TIPS price declines to outpace principal adjustment in the short term.

What are the issues with Treasury bills? ›

Treasury bills are debt obligations issued by the U.S. Department of the Treasury. T-bills have the shortest maturity date of all the debt issued by the federal government. You can purchase T-bills in $100 increments in non-competitive and competitive bids. T-bills are subject to federal, but not state and local taxes.

What happens to Treasury bills if the government defaults? ›

NBC Universal, Inc. Economists say consequences of a default on the national debt could include higher interest rates, a stock market crash, a recession and massive job losses.

Is a Treasury bill better than a CD? ›

CDs offer a fixed rate for locking up your money for a fixed period of time, but you'll only earn the highest returns if you choose longer terms. Treasury bills are shorter term and depending on the term you choose, you could lock your money up for as little as a few days or as long as one year.

Can I buy Treasury bills through my bank? ›

You can buy newly issued Treasuries of various durations through your bank or brokerage, which may charge a commission, or you can buy them commission-free online for as little as $100 through the government's TreasuryDirect program.

How does the person make money buying Treasury bills? ›

Every bill has a specified "maturity" date, which is when you receive money back. The government then pays you the full price of the bill — in this case $10,000 — and you earn $400 from your investment. The amount that you earn is considered interest, or your payment for the loan of your money.

Why buy CDs instead of treasuries? ›

CDs are considered a safe investment since they pay a guaranteed rate — and up to $250,000 of your funds are protected from bank failure when your CD is backed by the Federal Deposit Insurance Corp. (FDIC) or the National Credit Union Administration (NCUA).

What is the current 4 week Treasury bill rate? ›

4 Week Treasury Bill Rate is at 4.59%, compared to 4.52% the previous market day and 0.12% last year. This is higher than the long term average of 1.21%.

Which is better Treasury bills or notes? ›

Types of Treasury securities

Keep in mind that generally speaking, the longer the term, the higher the yield. Treasury bills are short-term debt securities that mature in less than one year whereas Treasury notes are intermediate-term government debt securities that mature in two, three, five, seven and 10 years.

What is the best thing to do with a lump sum of money? ›

Cash savings are always popular with people who want to put away a lump sum and earn interest over a long period of time. This can be a very good way to save for things, without taking on bigger levels of risk. Savings accounts are much safer, but how much interest you earn will come down to your bank's interest rate.

Are Treasury bills better than savings account? ›

Depending on your circumstances, however, one option may be superior for your financial goals. Treasury bills can sometimes earn higher yields than High-Yield Savings Accounts, but they also come with interest rate risk as well as inflation risk.

What to do with money sitting in the bank? ›

What to do with extra cash
  1. Pay off debt. If you have a significant amount of debt, consider putting your extra money toward paying that down or off. ...
  2. Boost your emergency fund. ...
  3. Increase your investment contributions. ...
  4. Invest in yourself. ...
  5. Consider the timing. ...
  6. Go ahead and treat yourself.

What is the interest rate on 91 day Treasury bills? ›

91-day T-bill auction avg disc rate
This WeekMonth Ago
91-day T-bill auction avg disc rate4.754.59
7 days ago

What is the interest rate on a 5 year Treasury bill? ›

5 Year Treasury Rate is at 4.26%, compared to 4.32% the previous market day and 1.74% last year. This is higher than the long term average of 3.74%.

What is the rate of 1 month Treasury bill? ›

1 Month Treasury Rate is at 4.75%, compared to 4.75% the previous market day and 0.19% last year. This is higher than the long term average of 1.24%.

What interest rate do treasury bonds pay? ›

Effective today, Series EE savings bonds issued May 2022 through October 2022 will earn an annual fixed rate of .10% and Series I savings bonds will earn a composite rate of 9.62%, a portion of which is indexed to inflation every six months.

What is the latest 3 month T bill rate? ›

Key Data
  • Open 4.851%
  • Day Range 4.851 - 4.851.
  • 52 Week Range 0.315 - 4.869.
  • Price 4 23/32.
  • Change 0/32.
  • Change Percent 0.00%
  • Coupon Rate 0.000%
  • Maturity Jun 1, 2023.

Are T-bills tax exempt? ›

Interest income from Treasury bills, notes and bonds - This interest is subject to federal income tax, but is exempt from all state and local income taxes.

Is Treasury bills better than fixed deposit? ›

Treasury bills are issued for a short-term, as less as 91 days, and may be redeemed easily, thus allowing you more liquidity than FD, the shortest tenor for which is 12 months.

What is the current yield on a 10 year treasury bill? ›

10 Year Treasury Rate is at 3.97%, compared to 4.08% the previous market day and 1.86% last year. This is lower than the long term average of 4.26%.

What is the 12 month average Treasury rate? ›

1 Year Treasury Rate is at 5.06%, compared to 5.02% the previous market day and 0.91% last year. This is higher than the long term average of 4.90%.

Why use 3 month Treasury bill as risk free rate? ›

Thus, the interest rate on a three-month U.S. Treasury bill (T-bill) is often used as the risk-free rate for U.S.-based investors. The three-month U.S. Treasury bill is a useful proxy because the market considers there to be virtually no chance of the U.S. government defaulting on its obligations.

What is the 8 weeks T bill rate? ›

The United States 8 Week Bill Yield is expected to trade at 5.15 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations.

How much do I need to buy Treasury bill? ›

It only takes $100 to start investing, and the buyer has two choices. T-bills are sold via auction, so investors need to place a bid.

What will interest rates be in 2023? ›

Bankrate predicts the Federal Funds rate will increase to around 5-5.25 percent (opens in new tab) in 2023. As a result, savings rates are expected to rise as well, with more high-yield savings accounts predicted to peak at 5.5 APY (opens in new tab) in the middle of this year, and many already surpassing 4%.

Where do you buy Treasury bills? ›

Buying through a bank, broker, or dealer

Individuals, organizations, fiduciaries, and corporate investors may buy Treasury securities through a bank, broker, or dealer. With a bank, broker, or dealer, you may bid for Treasury marketable securities non-competitively or competitively, but not both, for the same auction.


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