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How bills, notes, and bonds differ
The key differences are maturity and cash-flow timing. Treasury bills are short-term securities; notes and bonds make periodic interest payments and require a longer commitment if you plan to hold them to maturity.
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| Security | Available maturities | How cash flows | When to consider the term |
|---|---|---|---|
| Treasury bill | 4, 6, 8, 13, 17, 26, or 52 weeks | Sold at a discount or at par. At maturity, you receive the face value; the difference between the purchase price and face value is the bill’s return. | A cash need expected within about a year, with a maturity near the date the money is needed. |
| Treasury note | 2, 3, 5, 7, or 10 years | Fixed interest rate set at auction; interest is paid every six months. | Money that can remain invested for several years, or a situation where you can accept possible price losses if selling early. |
| Treasury bond | 20 or 30 years | Interest is paid every six months. | A long-dated goal, if the long maturity and potential price movement before maturity fit your circumstances. |
These terms and payment mechanics are listed by TreasuryDirect for bills, notes, and bonds.
Choose by the date you need the money
If you expect to use it within a year
Consider a bill whose maturity is close to the planned cash date. Its return is realized at maturity rather than through six-month interest payments. A maturity that is too early may leave you needing to reinvest; one that is too late may mean selling before maturity if the money is needed sooner.
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If you can leave it invested for several years
Compare note maturities with the time you can commit the money. Notes provide interest every six months, which can be useful if you want periodic cash flow. The payment schedule does not remove the possibility that a note’s market price will change if you sell before it matures.
If the goal is decades away
A 20- or 30-year bond has a substantially longer maturity than a note. Consider that term only if it fits the goal and you can tolerate price variation should you need to sell before maturity. A long-term Treasury is not the same as cash available at a predictable value on demand.
What happens if you sell before maturity?
All three are marketable securities, so they can be sold before maturity. Marketability means a sale is possible; it does not guarantee you will get the face value or recover your purchase price. The price you receive depends on market conditions when you sell.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallFor notes and bonds, TreasuryDirect explains the relationship between a security’s coupon and yield to maturity: the price can be below par when yield is higher than the coupon, at par when they are equal, or above par when yield is lower. Bills can also have a different sale price before maturity. Treasury securities are backed by the full faith and credit of the United States, but that backing does not prevent market prices from moving. See TreasuryDirect’s pricing explanation and its page on Treasury marketable securities.
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How to buy and what to check
TreasuryDirect lists a $100 minimum purchase. Individuals can buy at auction through TreasuryDirect using a noncompetitive bid, buy through a bank, broker, dealer, or other financial institution, or purchase in the secondary market. Routes and mechanics are described in the official Treasury marketable securities FAQs and how marketable securities work pages.
- Set the cash date. Identify when you expect to need the money and whether you can wait until a security matures.
- Choose the cash-flow pattern. Decide whether a bill’s maturity payment or a note’s or bond’s semiannual interest better fits your needs.
- Check what is currently offered. Auction offerings and yields change; consult current Treasury auction information before placing an order. Secondary-market prices also vary and should be checked at the time of purchase.
- Pick a purchase route. Review TreasuryDirect auction procedures or the terms, pricing, and fees offered by your financial institution or broker.
Tax treatment to verify
TreasuryDirect’s bill and note pages state that interest is subject to federal income tax and exempt from state and local income taxes. The cited bond page does not provide a separate tax statement, so check an official tax source or consult a qualified tax professional before relying on the same treatment for bonds.
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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.
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