Treasury payments, also referred to as T-bills, are short-term debt securities bought by the U.S. Treasury Division. T-bills are, in impact, a short-term mortgage to the federal government.

In contrast to different Treasury-issued securities (like T-bonds and T-notes), T-bills don’t pay periodic rates of interest. As an alternative, T-bills are auctioned by the federal government at a reduction to their face worth, and the whole return is the unfold between the scale of that low cost (the low cost fee) and the face worth at maturity.

In different phrases, the yield generated by a T-bill quantities to the distinction between what you paid and the face worth. When the T-bill matures, the federal government pays you the total face worth of the bond, and also you’re free to reinvest that cash.

This might sound counterintuitive at first, however costs and yields transfer in reverse instructions. To lift the yield on a T-bill, the Treasury should decrease the value — thus growing the unfold between the public sale worth and the face worth.

Conversely, when the demand for T-bills is excessive (for instance, in occasions of financial uncertainty), the value will increase and the yield goes down.

T-bills are auctioned weekly in $100 increments by the U.S. Division of the Treasury, with the usual phrases (4, 6, 8, 13, 17, 26 and 52 weeks) bought at various intervals. T-bills may also be purchased and bought on the secondary market.

The public sale worth determines the yield, which will be expressed on an annualized foundation because the coupon low cost fee. To date in 2025, the coupon low cost fee for a four-week T-bill has ranged from 4.08% to 4.34%, a lot greater than an ordinary financial savings account, however barely decrease than some high-yield financial savings accounts.