Can someone give me an introduction to t-bills?

Question

Or suggest a good resource for learning the basics on them

Answer 1

Go to the Treasury Department's web site.

Answer 2

Treasury Bill - T-Bill

A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks).

T-bills are issued through a competitive bidding process at a discount from par, which means that rather than paying fixed interest payments like conventional bonds, the appreciation of the bond provides the return to the holder.

For example, let's say you buy a 13-week T-bill priced at $9,800. Essentially, the U.S. government (and its nearly bulletproof credit rating) writes you an IOU for $10,000 that it agrees to pay back in three months. You will not receive regular payments as you would with a coupon bond, for example. Instead, the appreciation - and, therefore, the value to you - comes from the difference between the discounted value you originally paid and the amount you receive back ($10,000). In this case, the T-bill pays a 2.04% interest rate ($200/$9,800 = 2.04%) over a three-month period.

Answer 3

No basics to learn or research to do. Can get direct from govt via treasury direct. You get the interest up front as you pay less than the face value when you buy & receive the face when due. Only of use if you have a lot of excess money (a number of thousands) that you can't tie up too long. Nothing to bother with for 99% of folks.