Here’s how to buy Treasury bills when yields exceed 5%

  • Treasury bill yields have risen in recent months and currently exceed 5%.
  • But there are a few things investors should know before buying, according to financial experts.

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Treasury bill yields have risen in recent months, with one-month to one-year terms currently topping 5%, as of June 1.

However, there are a few things everyday investors should know about the Treasury bill buying process, according to financial experts.

Treasury bills, or T-bills, have terms from four weeks to 52 weeks and are backed by the United States government. Investors receive interest at maturity and there are options to reinvest.

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But there’s no direct rate comparison with other products because Treasury bills are typically sold at a discount, and full value is received at maturity, explained Jeremy Keil, a certified financial planner with Keil Financial Partners in Milwaukee.

For example, suppose you buy $1,000 in one-year Treasury bills at a 4% discount, with a purchase price of $960. To calculate your coupon rate (4.16%), you take your maturity of $1,000 and subtract the purchase price of $960 before dividing the difference by $960.


$1M US Treasury 1 month 5.232% +0.025
US3M US Treasury 3 months 5.382% -0.035
US6M US Treasury 6 months 5.45% -0.014
US1Y 1-year US Treasury 5.142% -0.058
US2Y 2-year US Treasury 4.337% -0.053
$10Y US Treasury 10 years 3,608% -0.029
US30Y US Treasury 30 years 3.834% -0.023

Fortunately, you’ll see “actual yield” or “bank equivalent yield” when you buy Treasury bonds through TreasuryDirect, a website run by the US Treasury Department, or your brokerage account, Keil said.

If you already have a TreasuryDirect account, for example, because you bought Series I bonds, it’s relatively easy to buy Treasury bills, according to Keil, who detailed the process on his website.

After logging into your account, you can choose Treasuries based on the auction date and term, which determines the discount rate for each issue.

“You really don’t know what the rate is going to be until the auction comes around,” Keil said. The process involves institutions making offers to one another, with no action required from regular investors.

How to buy Treasury bills through TreasuryDirect

1. Sign in to your TreasuryDirect account.

2. Click on “Direct Purchase” in the top navigation bar.

3. Choose “Bills” under “Tradable Securities”.

4. Choose your term, auction date, purchase amount, and rollover (optional).

After the auction, “you get exactly the same rate as the Goldman Sachs of the world,” and Treasury Direct issues Treasuries a few days later, he said.

However, there is a downside. If you want to sell Treasury bills before maturity, you must hold the asset with TreasuryDirect for at least 45 days before transferring it to your brokerage account. There are more details about the process here.

One way to avoid liquidity problems is to buy Treasury bills through your brokerage account, instead of using TreasuryDirect.

Keil said the “biggest benefit” of using a brokerage account is instant access to Treasury bills and immediate insight into their yield to maturity. The tradeoff is that you’ll probably give up a return of around 0.1% or less, he said.

George Gagliardi, CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts, also suggests buying Treasury bills off of TreasuryDirect to avoid liquidity problems.

For example, there are low-cost exchange-traded funds, available through brokerage accounts, that allow investors to buy and sell Treasuries before the end of the term, he said.

“Fees are a bit of a drag on interest,” Gagliardi said, but the ease of buying and the ability to sell before maturity “may offset the small interest rate penalty” for many investors.