T-Bills, or Treasury Bills, are short-term debt securities issued by the U.S. government and backed by the full faith and credit of the Treasury Department. They have maturities of one year or less and are considered low-risk investments. T-Bills are sold at a discount to face value, and the return is the difference between the purchase price and the face value at maturity. They are used as a benchmark for short-term interest rates and are a common tool for managing cash balances.
Proceeds from the sale of T-Bills are one of the main sources of financing for the U.S. government’s operations such as repaying outstanding U.S. debt and financing various initiatives and programs. Additionally, the sale of Treasury Bills helps to stabilize financial markets and provides investors with a safe and liquid investment option. It’s worth noting that the U.S. government’s borrowing needs are ongoing, and it continues to issue new Treasury Bills on a regular basis to finance its operations and repay outstanding debt. This helps to ensure that the government has access to the financing it needs to maintain its operations and support economic growth.
T-Bills bills offer higher yields than most savings or money market accounts (as high as 5.01%). T-Bills can be a useful tool for diversifying a portfolio and reducing overall risk, which is great for beginners and more conservative investors. Investors can earn a positive return even in low-interest rate environments. Read more about T-Bills from NerdWallet.
To buy T-bills, you can do the following:
1. Open a TreasuryDirect account: This is a program offered by the U.S. Department of the Treasury that allows individuals to buy and hold Treasury securities, including T-bills, in electronic form.
2. Choose a financial institution: You can also purchase T-bills through a broker or financial institution that offers Treasury securities.
Instead of going through the government’s website TreasuryDirect you can easily buy T-Bills from your Onyx Private account. Your funds will be held by Pershing BNY Mellon, Member FINRA, and upwards of $500,000 of SIPC insurance. Onyx is one of the first digital banks to launch T-Bills purchase option in an app.