Treasury bill (T-bill)

A Treasury bill, or T-bill, is a short-term debt security issued by the US government. It funds government operations for a period of one year or less. Common maturities range from a few weeks to twelve months.

T-bills are sold at a discount to their face value. An investor pays less than the face amount up front and receives the full face value when the bill matures. The difference between the purchase price and the face value is the interest the investor earns. T-bills do not pay periodic coupon interest.

Because they are backed by the US government and mature quickly, T-bills are widely treated as a benchmark for short-term, low-risk yield. The main risks are modest. Their return can trail inflation, and selling a bill before maturity means accepting the price the market offers at that time, which can be higher or lower than the purchase price.