![]() ![]() Here’s the math on a one-year Treasury Bill with a 5% discount rate: $500 interest ($10,000 maturity – $9,500 investment) / $9,500 investment = 5.265% coupon equivalent rate. Then you can compare it to something you are more used to called the annual percentage yield (if it’s a savings type investment) or annual percentage rate (if it’s a loan type account). Since they are quoted at a discount rate, in order to compare a Treasury Bill against something like a CD that has a similar time frame you would have to convert that discount rate over to something known as coupon equivalent rate. ![]() Instead, you would buy the T-Bill at a 5% discount, or $9,500 and 1 year later (52-weeks really) the bill would mature, and you would get $10,000. If the bank discount rate is 5% on a 1 year Treasury Bill it’s not like you would invest $10,000 and then see interest payments added daily or quarterly into your Treasury Bill. It’s not like getting interest payments within your bank savings, checking or CD accounts. The first thing to know is that they are quoted at a bank discount rate. They work a little different than your savings account, CD, or other type of bank money. Treasury Bills are known as ‘ marketable securities‘ in that they could be bought and sold on the ‘ secondary market,’ most likely through a brokerage account. T Bill rates are more set by what the market believes about the inflation rate and other rates in the economy. savings account know that a T bill is not part of the Federal Reserve System like your bank accounts are. When you are trying decide on T Bills vs. How do Treasury Bills work to get you more interest than a money market or savings account? You could buy T-Bills from your broker or other financial institution, but another way is to make a direct purchase through the US Treasury. Treasury Bills (T-Bills) are short-term debt issued by the US Government that come due in 1 year or less. If you’re wondering when to cash out your I Bonds, check out our post When Should I Cash Out My I Bonds? Look at Short-Term Treasury Bills (T-Bills) If you’ve maxed those out or decided they weren’t right for you, then consider Treasury Bills (T-Bills). One place that has been popular lately is US Series I Savings Bonds (I Bonds). And with mortgage rates that rose drastically in 2022, and still high in 2023, you may prefer to keep that lower interest rate from the mortgage you got in 2021 or earlier.īut let’s assume you’ve already paid off all the debt you’d like to pay off. While the first place to look for great interest is paying down your credit card or other loan accounts, you also need to keep in mind the potential tax benefits from a student loan or mortgage. (Rates as of May 10th, 2023) Start with paying down debt The new 17-week Treasury Bill rate is 5.16%! Here are the steps to buy Treasury Bills through Treasury Direct.Which length of Treasury Bill should you buy?.How do you get your money back with Treasury Bills?.How do Treasury Bills work to get you more interest than a money market or savings account?.Look at Short-Term Treasury Bills (T-Bills). ![]()
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