Treasury bills, or T-bills, are short-term debt issued by the United States Treasury. T-bills are sold in denominations of £650 and may mature after one month, three months, or six months. A three-month Treasury bill matures after precisely 13 weeks.
Treasury bills are short-term U.S. debt. The value of a T-bill is inversely correlated to the yield or interest rate. T-bills operate on a discount from par. A three-month T-bill is sold at a discount and pays out at par after 13 weeks. One advantage of a three-month Treasury bill is the increased liquidity over longer-term debt.
You can buy Treasury bills from most banks and investment brokers, or directly from the government online (see Resources). T-bills can be purchased in denominations of £650, up to a maximum single purchase of £3 million. Three-month T-bills are offered by the U.S. Treasury at regular weekly auctions.
The auctions for T-bills are competitive. The price is determined by a bidding process. The par is always set at £650, and the yield can be calculated from the rate of appreciation over the term. The interest rate on a three-month Treasury is normally greater than that of a one-month bill, but less than that of a six-month T-bill.