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Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Start with when you may need the money. Treasury bills mature in one year or less, while Treasury bonds mature in 20 or 30 years. A bill generally pays its return at maturity; a bond pays interest every six months. If you sell either before maturity, the price you receive depends on the market at the time, so it may differ from face value. Matching a maturity to a planned cash need is a useful starting point—not a guarantee that one security is best for everyone.
How do Treasury bills and Treasury bonds differ?
The central differences are maturity, how the return is paid, and what can happen if you sell before maturity. These are U.S. Treasury marketable securities, which can be bought at auction or in the secondary market.
| Feature | Treasury bills | Treasury bonds |
|---|---|---|
| Maturity | One year or less. TreasuryDirect currently lists 4-, 6-, 8-, 13-, 17-, 26- and 52-week terms. | 20 or 30 years. |
| How return is paid | Sold at face value or at a discount; at maturity, Treasury pays face value. The difference between the purchase price and face value is the interest earned. | Fixed-rate interest, with the coupon rate set at auction and payments made every six months. |
| Price before maturity | Can be sold before maturity in the market; proceeds depend on the market price then. | Can trade below, at or above face value. The relationship between the bond’s yield to maturity and coupon rate affects its price. |
| Minimum purchase | $100, in $100 increments. | $100 for Treasury marketable securities, in $100 increments. |
These product terms and purchase minimums are published by the U.S. Treasury on its marketable securities overview and Treasury bills page. Terms and auction schedules can change; check the current Treasury pages when choosing a specific security.
Which fits your time horizon?
Compare the security’s maturity date with the date you expect to need the money. A maturity that falls near a planned expense can make the timing easier to manage. Neither a bill nor a bond is automatically the right choice solely because it has a shorter or longer term.
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If you may need the money within a year
A bill’s short terms offer several maturity points, from 4 weeks to 52 weeks according to TreasuryDirect’s current listing. Consider the bill whose maturity most closely matches the cash need. If your timing changes, you can sell before maturity, but the sale price is not necessarily face value.
If you are considering a 20- or 30-year commitment
A Treasury bond has a much longer maturity. It may suit someone able to keep the investment for a long period, but you are not required to hold it until maturity: a marketable bond can be sold earlier. The price at that time may be above or below face value, so a long maturity is not the same as a guaranteed resale amount.
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If you want regular interest payments
Bonds pay interest every six months. Bills do not provide that same periodic payment stream: their interest is reflected in the difference between the discounted purchase price and face value paid at maturity. Choose based on when you need cash flows, not on an assumed promise that one security will earn more.
What happens if you sell before maturity?
Treasury marketable securities can be sold in the secondary market before maturity, but the resale price is set by market conditions. Treasury’s pricing explanation says a bond may trade below face value when its yield to maturity is higher than its coupon rate, or above face value when its yield is lower. If a bill is sold early, its sale proceeds likewise depend on its then-current market price.
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Treasury securities are backed by the full faith and credit of the U.S. government. That backing should not be confused with a guarantee that a sale before maturity will return face value. If you expect to need the money early, account for the possibility that the market price at sale differs from what you paid or from face value.
For the mechanics of pricing, see TreasuryDirect’s explanation of pricing and interest rates.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How can you buy Treasury bills or bonds?
All Treasury marketable securities are sold at auction, and investors can also buy them in the secondary market. Individuals can use TreasuryDirect or a broker, dealer or financial institution. The route affects bidding and custody arrangements.
- TreasuryDirect auction purchase: TreasuryDirect accepts noncompetitive bids. A noncompetitive bidder accepts the auction return.
- Competitive auction bid: A bidder specifies the return sought and may receive a partial award or no award.
- Broker or financial institution: The security is held through the commercial book-entry system, placing the intermediary in the custody chain; service fees may apply.
TreasuryDirect reports a $100 minimum purchase, in $100 increments, for marketable bills, notes, bonds, TIPS and FRNs. Compare any intermediary’s fees, custody arrangements and transfer features before choosing a route. Details are in TreasuryDirect’s FAQs about Treasury marketable securities.
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What should you check before choosing?
- Cash date: Identify when you may need the principal and whether the maturity date lines up with that date.
- Payment timing: Decide whether you need periodic interest payments or a return realized at bill maturity.
- Early-sale possibility: Consider whether you might sell before maturity and whether you could tolerate receiving a market price below face value.
- Purchase route: Compare direct TreasuryDirect participation with a broker or financial institution, including custody and possible fees.
- Taxes: TreasuryDirect states that bill interest is subject to federal tax and exempt from state and local taxes. Do not assume the same treatment or make a tax comparison for bonds without checking current applicable rules with an appropriate tax authority or adviser.
These securities are marketable investments, unlike nonmarketable savings bonds, which cannot be sold or transferred in the same way. Treasury’s product descriptions and rules are available through the TreasuryDirect links above.
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Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
