Treasury Bills (T-Bills) are among the safest investments backed by the U.S. government. They are short-term securities that offer predictable returns with minimal risk, making them popular among individual investors, institutions, and retirement portfolios.
Treasury Bills Calculator
🧾 What Are Treasury Bills?
Treasury Bills are short-term debt instruments issued by the U.S. Department of the Treasury. They are sold at a discount to face value and mature at full value. The difference between the purchase price and the face value represents the interest earned.
- Maturities: 4, 8, 13, 17, 26, or 52 weeks
- Face Value: Usually $1,000 or multiples thereof
- Risk: Virtually zero; backed by the U.S. government
- Interest: Paid as a discount; no periodic coupon payments
🧮 How the Treasury Bills Calculator Works
To use the Treasury Bills Calculator, follow these simple steps:
- Enter the Face Value – Usually $1,000 or higher.
- Select the Purchase Price – The price you’re paying per bill.
- Choose the Term (in days) – Common options: 28, 91, 182, 364 days.
- Click Calculate – The tool will show:
- Discount Rate (Yield)
- Annualized Return
- Total Interest Earned
- Effective Yield (if reinvested)
🔢 Key Formulas Used in the Calculator (Plain Text)
- Discount Yield (Bank Discount Basis):
vbnetCopyEditDiscount Yield (%) = [(Face Value - Purchase Price) / Face Value] × (360 / Days to Maturity) × 100 - Investment Rate (Bond Equivalent Yield):
cppCopyEditInvestment Rate (%) = [(Face Value - Purchase Price) / Purchase Price] × (365 / Days to Maturity) × 100 - Interest Earned:
iniCopyEditInterest = Face Value - Purchase Price - Effective Yield (if reinvested):
vbnetCopyEditEffective Yield = (1 + Periodic Yield)^(365 / Days) - 1 📊 Example: Calculating Yield on a 26-Week T-Bill
- Face Value: $10,000
- Purchase Price: $9,800
- Term: 182 days
Step 1 – Calculate Discount Yield:
javaCopyEditDiscount Yield = [(10,000 - 9,800) / 10,000] × (360 / 182) × 100 = 0.02 × 1.978 × 100 ≈ 3.96% Step 2 – Calculate Investment Rate:
javaCopyEditInvestment Rate = [(10,000 - 9,800) / 9,800] × (365 / 182) × 100 = 0.0204 × 2.005 × 100 ≈ 4.09% So your yield is approximately 4.09% annually on an investment of $9,800 over 182 days.
💡 Benefits of Using the Treasury Bills Calculator
- 📈 Fast Yield Comparisons – Evaluate multiple terms and purchase prices instantly.
- 📉 Understand True Return – See both discount yield and investment rate.
- 💰 Plan Better – Know your exact return before you invest.
- 🔁 Reinvestment Insight – Assess effective yield if you roll over the T-Bills.
📌 When Should You Use This Tool?
- When comparing T-Bill rates at auctions or secondary markets
- When planning short-term investments in a low-risk portfolio
- When estimating interest for budgeting or tax purposes
- When managing large cash balances with safety in mind
🔍 T-Bills vs. Other Investments
| Investment Type | Risk Level | Return Style | Maturity |
|---|---|---|---|
| Treasury Bills | Very Low | Paid at maturity | 4–52 weeks |
| Savings Account | Low | Interest monthly | No maturity |
| CDs | Low | Interest fixed | 6–60 months |
| Stocks | High | Dividends/capital gain | No maturity |
📘 20 Frequently Asked Questions (FAQs)
1. What is a Treasury Bill?
A Treasury Bill is a short-term government debt instrument sold at a discount and redeemed at face value.
2. How do T-Bills make money?
You earn interest by buying them at a discount and receiving the full face value at maturity.
3. Are T-Bills safe?
Yes, they are backed by the full faith and credit of the U.S. government.
4. What is the minimum investment?
Typically $100 at auction, but commonly purchased in $1,000 increments.
5. Do T-Bills pay interest?
Not like bonds. They are sold below face value and pay the full amount at maturity.
6. How is the yield calculated?
Yield is based on the difference between purchase price and face value, annualized using either 360 or 365 days.
7. What's the difference between discount yield and investment rate?
Discount yield is based on face value; investment rate is based on the actual investment amount.
8. Can I reinvest my T-Bill earnings?
Yes, and the calculator can estimate your compounded returns.
9. Are T-Bills taxable?
Yes, the interest is subject to federal tax but exempt from state and local taxes.
10. How long should I hold a T-Bill?
Until maturity. Selling early on the secondary market may impact your return.
11. Where can I buy T-Bills?
Through TreasuryDirect.gov, banks, or brokerage firms.
12. What’s the difference between T-Bills and Treasury Bonds?
T-Bills mature in less than 1 year; Treasury Bonds are long-term (10+ years).
13. Are T-Bills a good short-term investment?
Yes, especially for capital preservation and low-risk returns.
14. How often are auctions held?
T-Bills are auctioned weekly, and rates vary depending on demand.
15. Can businesses use this calculator?
Yes, it's perfect for individuals, businesses, or institutions managing liquidity.
16. What if I enter the wrong number?
The calculator allows easy reset and recalculation.
17. Is it better to buy at auction or secondary market?
Auctions may offer better pricing; secondary markets offer flexibility.
18. Is this calculator suitable for 0% interest environments?
Yes, it can handle zero or near-zero yields accurately.
19. Can I compare different maturity terms?
Absolutely. Try different days to see how term length affects your yield.
20. Is this calculator free?
Yes. It’s free and available online anytime.
🧠 Final Thoughts
Treasury Bills are a go-to investment for those prioritizing security, liquidity, and predictable returns. Whether you're a seasoned investor or just starting out, our Treasury Bills Calculator simplifies the numbers so you can focus on smart investing.