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Clear out junk files and repair common Windows errorsFree Scan →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →Match the Treasury security’s maturity to when you expect to need the money. Treasury bills mature in one year or less and pay their return at maturity; Treasury bonds mature in 20 or 30 years and pay interest every six months. A bond can be sold before maturity, but its market price may be above or below face value. There is no universally best choice based on time horizon alone.
How long do Treasury bills and Treasury bonds last?
Treasury bills are short-term marketable securities with maturities of one year or less. Treasury currently lists standard bill terms of 4, 6, 8, 13, 17, 26, and 52 weeks. Treasury bonds are long-term securities with maturities of 20 or 30 years. These are product terms published by the U.S. Department of the Treasury, not forecasts of performance. Treasury’s overview of marketable securities and its Treasury bills page list the available terms.
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What is the difference in how bills and bonds pay?
Treasury bills: return at maturity
A bill is sold at face value or at a discount. At maturity, Treasury pays the face value; the difference between the purchase price and face value is the interest earned. The cash return therefore arrives at maturity rather than as regular interest payments during the term. For example, a bill bought below face value returns its face value at maturity, with the gap representing the interest. TreasuryDirect explains bill pricing and payment.
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A Treasury bond’s fixed coupon rate is set at auction, and interest is paid every six months. The face value is repaid at maturity. The semiannual payments create periodic cash flow, but they do not eliminate the possibility that the bond’s resale price will move before maturity. TreasuryDirect’s pricing explanation describes the relationship between coupon rates, yields, and market prices.
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Which fits your time horizon?
If you expect to need the money within a year
Consider whether one of the bill’s maturity dates lines up with the cash need. Bills offer several shorter terms, but choosing a bill whose maturity is after the date you need the money may leave you relying on an early sale at the then-current market price. If the date is important, compare the specific maturity date—not just the label “short-term”—with the expected expense.
If you can commit for 20 or 30 years
A Treasury bond has a much longer stated maturity. That may align with a long-term holding horizon, particularly if semiannual interest payments suit the cash-flow plan. The maturity is not a requirement to hold the bond until the end: marketable securities can be sold early, but the price at sale may differ from face value.
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If your horizon falls between those ranges
The bill and bond maturities described here do not offer a single matching term for every intermediate need. Avoid treating the choice as a bet on which security will have the higher yield: a valid return comparison requires dated auction or secondary-market prices and a specified holding period. Consider whether an available bill maturity, a longer bond commitment, or another Treasury security better matches the date and cash-flow needs.
Can Treasury bonds lose value if you sell before maturity?
Yes. A marketable bond’s resale price depends on market conditions, including how its yield to maturity compares with its coupon rate. If the market yield is higher than the bond’s coupon rate, the bond’s market price can be below face value; if the yield is lower, the price can be above face value. A sale before maturity therefore may return more or less than face value. Treasury securities are backed by the full faith and credit of the U.S. government, but that backing does not promise a particular resale price. TreasuryDirect explains this pricing relationship.
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Bills can also be sold before maturity, and their sale proceeds depend on the market price at that time. Holding a security to maturity is different from selling it early: the early-sale price is not assured to equal face value.
How to buy and hold Treasury bills or bonds
Treasury marketable securities are sold at auction and can also be purchased in the secondary market. TreasuryDirect accepts noncompetitive bids; investors can also use a broker, dealer, or financial institution. TreasuryDirect reports a $100 minimum purchase for marketable bills, notes, bonds, TIPS, and FRNs, in $100 increments. A noncompetitive bidder accepts the auction return. A competitive bidder specifies a return sought and may receive only a partial award or no award. In the commercial book-entry system, a broker or financial institution is in the custody chain, and service fees may apply. See TreasuryDirect’s marketable securities FAQs for route and bidding details.
Bills are electronic and can be held to maturity or sold sooner. Treasury’s bill page lists weekly auctions for shorter standard terms and an auction every four weeks for 52-week bills; actual dates should be checked on the official auction calendar because schedules can change. Cash management bills have variable terms and are not available in TreasuryDirect. The Treasury bills page provides current product and schedule information.
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What about taxes?
TreasuryDirect states that tax is due on interest earned from bills and that bills are exempt from state and local taxes. The cited material does not establish a full comparative tax analysis for bills versus bonds, so tax treatment should not be generalized from that bill-specific statement. Check current rules for your circumstances before making a tax-based choice.
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Do not confuse marketable securities with savings bonds
Treasury bills and bonds are marketable securities that can be sold before maturity. Savings bonds are nonmarketable and cannot be sold or transferred in the same way. The maturity and resale discussion in this article applies to marketable bills and bonds, not savings bonds. TreasuryDirect distinguishes its marketable securities.
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