what is a t bill

A Treasury Bill (T-Bill) is a short-term debt obligation issued by the U.S. Department of the Treasury and backed by the U.S. government with a maturity of less than one year. T-bills are sold at a discount from their face value, which is the amount that the government will pay when the bill matures. They are issued in maturities of 4, 8, 13, 17, 26, and 52 weeks. T-bills can be purchased in increments of $100, and the minimum purchase is $100. When the bill matures, the investor is paid the face value of the bill, and the difference between the face value and the purchase price represents the interest paid to the investor. T-bills are considered a safe and conservative investment since the U.S. government backs them. They are often used in lieu of cash by knowledgeable investors who understand they pay a higher rate of interest than cash instruments or accounts such as money market funds.