Meaning of US Treasury Bills (T-Bills)? What is US Treasury Bills (T-Bills)? What does US Treasury Bills (T-Bills) mean? What does US Treasury Bills (T-Bills) acronym stands for? What is the definition of US Treasury Bills (T-Bills)?

A short-term debt obligation backed by the U.S. government with a maturity (time of expiration) of less than one year. US Treasury Bills (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).

US Treasury Bills (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.

US Treasury Bills (T-Bills) Example:
For example, let's say you buy a 13-week US Treasury Bill (T-Bill) priced at $9,800. Essentially, the U.S. government (and its nearly bulletproof credit rating) writes you an IOU (I Owe You guarantee paper) 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 US Treasury Bill (T-Bill) pays a 2.04% interest rate ($200/$9,800 = 2.04%) over a three-month period.