How to Buy U.S. Treasury Bills

The Juice has spent a significant chunk of 2023 going back to personal finance and investing basics. One of our most popular installments this year details how to build a CD ladder: 

To create a CD ladder, you spread equal amounts of money across multiple certificates of deposit with different maturity dates…

The beauty of this approach is not only that it tends to generate more income than a standard savings account, but that you don’t tie up all your money for a long time. Every few months, you can take out some cash if you need or want it. 

You can execute a similar strategy by purchasing United States Treasury Bills, or T-bills. The government issues T-bills to investors to help finance its operations. To purchase a T-bill, you need to set up an account at the Treasury Direct website: 

It’s a pretty simple process, however, leave it to the government to make logging in a pain. You have to use an on-screen keyboard each time you want to view your account to type in your password. 

Once set up and logged in you have various options for investment. Today, we focus on T-bills. 

A willing guinea pig in The Juice’s office let us use their account. 

You can see this person owns $1,000 worth of treasury bills, broken down like this. 

Here’s a closer look at the details on the 4-week T-bill. 

The par amount is the amount the investor will receive when the T-bill matures. However, the investor paid $498.39 ($99.677222 X 5) for the 4-week T-bill. The government sells T-bills at a discount. 

In this case, the annualized interest rate is 4.233%. Factors such as supply and demand and, as is the case right now, inflation dictate T-bill interest rates. 

Once a T-bill matures, like a CD, you can roll it over into another T-bill. The Treasury Direct interface allows you to set (and edit) the number of times you’d like to reinvest. 

You can purchase T-bills with terms of 4, 8, 13, 17, 26 or 52 weeks. At the moment, you can expect annualized interest rates in the mid-to-high four percent range. 

The Bottom Line: Maybe you’re spooked by the latest developments in the cryptocurrency markets and at regional banks. Maybe you’re pissed at the nation’s big banks for the paltry interest rates on your savings. Maybe you don’t want to put all of your money in the stock market. Maybe you’re close to retirement or a big purchase and feel better sitting completely in cash. 

Whatever your reality, U.S. Treasury Bills can make sense as a safe haven to park your cash and earn relatively solid interest rates with minimal, if any risk, given that the U.S. Government issues and backs these securities.

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