How do Treasury bills work and where can they be bought?
Annette American Dear Annette: U.S. Treasury bills are short-term debt obligations (securities) of the U.S. government. A Treasury bill matures within one year. Treasury notes have maturities up to 10 years, while Treasury bonds have a final maturity of more than 10, but less than 30, years. The Treasury hasn’t offered a new bond since October 2001. The government issues new four-week, 13-week and 26-week T-bills weekly. In the weeks leading up to quarterly tax payment dates the Treasury may announce and offer cash management bills. Treasury bills are priced at auction. All winning bidders pay the same price for the auctioned security. T-bills are discount securities. That means that a bill is bought at a discount to its stated or face value. The government pays the face value at maturity. The interest earned is the difference between the price paid and the price received on the T-bill when it is sold or matures.
