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How to Buy Treasury Bills and Treasury Notes

A shimmering golden number one hundred in the corner of a United States one hundred dollar bill.

I'm discussing a different kind of bill in this post, but you can buy treasury bills and notes in one hundred dollar increments, so the photo kind of fits. Photo by Giorgio Trovato on Unsplash

Treasury bills and notes are two securities products offered by the United States Treasury Department. One reason to invest in U.S. securities is that they're very low-risk. It's unlikely, after all, that the federal government won't pay its debts.

Treasury bills and notes are also tradable on the secondary market. You can sell them before they reach maturity. Buying treasury bills and treasury notes, however, is a little less straightforward than buying stocks. Here's what I've learned about the process.

Disclaimer!

Just in case you're not one of the same 10 friends I know in real life who has always read my blog, know that I am not a financial advisor. I am a web developer who also posts opinions on the internet. You may want to talk to a professional before you make any decisions. Or not. I manage our portfolio based on stuff I've read in books and heard on podcasts 🤷🏽‍♀️.

Choose Your Dealer

You have two options for buying treasury bills and notes:

  1. use a brokerage, such as Fidelity, TDAmeritrade, or Schwab1; or
  2. use TreasuryDirect.gov. It's a government-run website set up for the purpose of buying U.S. government securities.

Advantages of using a brokerage account:

  • You can track all of your investments in one place.
  • You can buy bills and notes on the secondary market.
  • It's easier to sell the security if you don't plan to hold it to maturity.
  • You can make competitive bids, which may give you better pricing.2

If you use TreasuryDirect, you can only make non-competitive bids. You'll end up paying whatever prevailing rate was set at auction.

That said, there are some pros of using TreasuryDirect instead of a brokerage3:

  • You can schedule purchases days or weeks in advance.
  • You can buy bills and notes in $100 increments. Some brokerages impose a purchase minimum of $1000.
  • You can schedule the proceeds to be reinvested when the security matures.

I've purchased bills and notes using our brokerage account and with TreasuryDirect, and prefer TreasuryDirect. Its purchasing process is very straightforward. There's no need to know what a CUSIP is or where to find it.

Treasury Bills versus Treasury Notes

Treasury bills, also known as T-Bills are short-term, zero-coupon bondssecurities. You can buy bills that mature in 4, 8, 13, 17, 26, or 52 weeks.

When you buy a treasury bill, you're buying money at a discount. For instance, $100 might cost you $99.30. At maturity, the government pays you the full or par value of $100. The difference between your discount and the full value of your T-bill is your yield. You can calculate the annualized yield of a treasury bill using the JavaScript below.

const annualized_tbill_yield = (price, weeks_to_maturity, is_leap_year = false) => {
  const FULL_VALUE   = 100;
    const DAYS_IN_YEAR = 365;
    const DAYS_IN_WEEK = 7;

    const leap_day = is_leap_year ? 1 : 0;

    const discount = (FULL_VALUE - price);
    const the_yield = (discount / price) * FULL_VALUE;

    const days_to_maturity = weeks_to_maturity * DAYS_IN_WEEK;

    const annualized = the_yield * ((DAYS_IN_YEAR + leap_day) / days_to_maturity);

    return `Annualized yield on this note is: ${ annualized.toFixed(3) }%`;
}

// Example of use
console.log( annualized_tbill_yield(99.30, 4) );

Pop that into a file named annualized_tbill_yield.js, and run it from the command line using Node or Deno (e.g. node annualized_tbill_yield.js).

Treasury notes, on the other hand, are mediumshort-duration coupon bonds. You can buy treasury notes that reach maturity in 2, 3, 5, 7, or 10 years.

A treasury note pays a fixed rate of interest every six months until it matures. You'll never earn less than 0.125% interest. As of December 9, 2022, a 10-year treasury note pays 4.125%, while 2 and 3 year notes pay about 4.5%.4

You'll typically pay a little less than the note's par value at purchase. For example, I recently bought a 2-year treasury note worth $200, and paid $198.73 ($99.36 per $100) for it. At maturity, I'll receive the par value of the note ($100), plus any interest paid over the note's duration.

Typically, doesn't mean always, however. You may end up paying slightly more than par. The reopening of 91282CFV8, for example, cost $104 per $100, while the original issue cost $99.87.

Keep in mind that the process for bBuying treasury notes is follows the same process for as buying treasury bonds. The primary difference is that treasury bonds mature in 20 or 30 years. United States treasury bonds have longer durations of 20 or 30 years Keep in mind that treasury bonds are not savings bonds. I cover treasury bonds and savings bonds in another post.

Bills, Notes, and CUSIP Numbers

You may need to know the CUSIP number of a note or bill before you buy it. TreasuryDirect lists CUSIP and auction date information for new and recently-issued securities on its Upcoming Auctions page.

Find the CUSIP number of the bill or note you'd like to purchase. Then search for that CUSIP on your brokerage's website. Look in your brokerage's bonds and fixed-income section.

Treasury bills trade close to their original price on the secondary market. After all, you're buying money at a discount. Pricing for treasury notes works a little bit differently.

Buying Notes on the Secondary Market

When interest rates go up, the price of existing treasury notes and bonds decreases. The same is true of corporate and government bonds. Those notes now pay less than the going interest rate. As a result, they become less desirable, and their price drops. Price drops, in turn, improve the note's yield.

For example: 91282CCS8 is the CUSIP number of a 10-year treasury note with a coupon (interest rate) of 1.25%.5 When issued, it sold for $99.16 per $100. As of December 6, 2022, its price has fallen to about $83 per $100. That price produces a yield of about 3.5% — much closer to current rates for the 10-year treasury note.6

Whether treasury bills and notes are right for you depends on your investment objectives and risk tolerance. I think they're worth owning given current interest rates. Treasury rates are currently higher than most dividend yields. You do, however, lose the potential for price appreciation that you get with stocks.


  1. Your bank may or credit union may also have a brokerage arm. Keeping your money with one institution may help you get discounts on checking and other services. It's something to investigate. 

  2. You can sometimes pay more than the par value for a bill or note if you buy it on the secondary market. You can avoid this by placing a limit order for purchase. Just keep in mind that you may not be able to complete a purchase if you set too low of a limit. 

  3. Some brokerages may offer the option to schedule purchases and automatically reinvest the proceeds. My brokerage offers the latter, but not the former. 

  4. Use the Auction Query page to find historical pricing data for U.S. securities. 

  5. When shorter-term interest rates are higher than long term rates — as they are now — it's known as an inverted yield curve. Inverted yield curves tend to precede a recession. 

  6. Investopedia explains how to calculate treasury yields, but your brokerage's web site should also provide that information.