How T-Bills Work
Treasury bills are short-term U.S. government debt sold at a discount: you might pay $9,780 today for a bill that pays $10,000 in 26 weeks. The $220 difference is your interest. Backed by the U.S. government, they're considered the benchmark risk-free asset, and you can buy them commission-free at TreasuryDirect or through most brokerages.
Two Yields, One Bill
T-bills are quoted two ways. The discount yield divides profit by face value using a 360-day year — it's the official auction convention but understates your true return. The bond-equivalent yield (BEY) divides profit by what you actually paid using 365 days — use this one when comparing against CDs or savings APYs.
T-Bill Terms: 4-Week to 52-Week
The Treasury auctions bills in seven standard terms, and this calculator handles all of them:
- 4-week (28-day) T-bills — the shortest standard term, auctioned weekly. Popular for parking cash very briefly; a $10,000 bill bought at $9,966 yields about 4.4% annualized. Because the term is so short, the dollar profit per bill is small — around $34 in this example.
- 6-week and 8-week bills — newer additions, also auctioned frequently; useful for building tight T-bill ladders.
- 13-week (91-day) bills — the classic "3-month T-bill" quoted in financial news; auctioned weekly.
- 17-week and 26-week bills — the middle of the curve; 26-week (6-month) bills are the most common CD alternative.
- 52-week (364-day) bills — auctioned every four weeks; the closest T-bill equivalent to a 1-year CD.
To compare any of these against a CD of similar length, calculate the BEY here and put the same term into our CD rate calculator — highest number wins, after the tax note below.
T-Bills vs CDs
- T-bill interest is exempt from state and local income tax — a real edge in high-tax states. A 4.4% T-bill can beat a 4.6% CD after state tax.
- T-bills can be sold before maturity on the open market (price may vary); CDs charge fixed penalties instead.
- CDs sometimes pay more, especially promotional rates — compare BEY vs APY for a fair fight.
Frequently Asked Questions
How do I calculate a 4-week T-bill yield?
Same formula, 28 days: BEY = (face − price) ÷ price × 365 ÷ 28. Select "28 days (4-week)" above, enter your auction price, and both yields are computed for you.
How much does a $1,000 T-bill cost?
Slightly less than $1,000 — the discount is your interest. At a 4.4% yield, a 26-week $1,000 bill costs about $978.50 and pays $1,000 at maturity.
Are Treasury notes calculated the same way?
No — Treasury notes (2 to 10 years) pay semi-annual coupon interest rather than selling at a pure discount, so their yield math differs. This calculator is designed for bills of one year or less.
Where do I find my purchase price?
On TreasuryDirect, the price per $100 appears with your auction result — multiply by your face value ÷ 100. At a brokerage, it's on your trade confirmation.