Treasury Bills (T-Bills) are government-backed securities, with a minimum purchase price of $1,000. They are offered in 3-month, 6-month, and 12-month lengths. You buy the T-bill at a discount which, when divided by the effective cost, equals your rate of interest. (So if you purchase a $10,000 T-bill for $9,300, your interest rate is $700, $9,300=.08 or 8 percent.) The discount is deposited immediately into your account, and the rest of the face value arrives on the day the bond matures. You have the option of rolling over your T-bill for another period. Since T-bills, like all offerings from the Treasury Department are backed by the full faith and credit of the U.S. Government, they’re considered just about the safest investments around.
Treasury Bills (T-Bills)