US Treasury Bill Calculator [ T-Bill Calculator ] (2024)

In a nutshell, US T-Bills (Treasury Bills) are very safe short term bonds supplied by the US government, with a maturity period of less than one year. The yield (profit) is low due to the ultra-safe nature of the bond, the US Government promises to pay the face value of the bond over the agreed maturity period, the price you pay for the bond is determined by the bidding process.

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About the US Treasury Bill Calculator

The following information provides further details about the input fields on the T-Bill Calculator. We also provide information on how to calculate the annual interest rate on a T-Bill further down this page for those who are new to T-Bill or wish to manually calculate the T-Bill interest rate.

  • Face Value of T-Bill: This is the amount to be received at end of period of the T-Bill. You can choose a standard T-Bill value or enter your own T-Bill value:
    • Standard T-Bill Value: This is a standard denomination T-Bill value that T-Bills are normally purchased at in auction.
    • Other T-Bill Value: The other T-Bill value allows you to enter non-standard T-Bill Amounts. Let's say you end up with three T-Bills, one for $1,000, one for $5,000 and a third for $10,000. You could select each one individually from the standard T-Bill value and add to table for a breakdown or simply enter $16,000 into the Other T-Bill Value to calculate the return on investment across multiple T-Bills.
  • Maturity Period: The T-Bill Maturity period is the duration for which the T-Bill will be held before being cashed in for the return value on the face of the T-Bill. You can select a standard Maturity Period duration of enter your own period for bespoke calculations.
    • Standard T-Bill Maturity Period: Choose one of the Standard T-Bill maturity periods or
    • Other Maturity Period: Enter a bespoke T-Bill Maturity Period based on days, weeks or months
  • T-Bill Price: This is the price that paid for the T-Bill at auction.
  • T-Bill Profit: This is the gross profit (Gross profit = T-Bill Price - T-Bill Face Value). This is also referred to as the T-Bill Yield.
  • Percentage Return on T-Bill: This tis the standard return percentage on your T-Bill payment without factoring in the duration for which the T-Bill is held.
  • Annual Percentage Return on T-Bill: This is the annual interest rate achieved on your T-Bill investment transposed from the duration of the T-Bill to an annualised amount.

US Treasury Bill Calculator [ T-Bill Calculator ] (1)

What is a US Treasury Bill?

A US Treasury Bill, also known as a T-Bill are a short term debt obligation which is backed by the United Stated Treasury. US T-Bills typically have a 1 year maturity value or less

How are Treasury Bills Sold?

The US Treasury Department normally sells T-Bills in one thousand dollar ($1,000.00) denominations though they can reach a minimum five million dollars ($5,000,000.00) for no competitive bids. T-Bills are sold at auction using either a competitive or noncompetitive bidding process:

  • Competitive Bidding Process: Competitive bidders specify the rate, yield or discount margin that is acceptable within their dib. Competitive bidders are not guaranteed to receive T-bills at the end of the Bill Auction process.
  • Non-competitive bidding process: Noncompetitive bidders do not accept any predefined terms, they agree to accept the rate, yield or discount margin as defined during the auction. The T-Bill price is based on the average of all competitive bids received. You may also see noncompetitive bids referred to as noncompetitive tenders. Noncompetitive bidders are guaranteed to receive t-bills at the end of the Bill Auction process

How do Treasury Bills Work?

T-Bills work by selling a bond at a defined value (lets say $1000) for a value less that its face value (say $800). The Treasury then using the value of the investments and guarantees a payout at the facevalue of the T-Bill at the end of a fixed period. T-Bills are sold at auction, T-Bill Auctions are typically several days before auction start with a view to increasing interest and generating demand.

T-Bills are usually sold in dominations of $1000 using the bidding process as outlined above and the standard periods are one month (4 weeks), Three months (13 weeks) or six months (26) weeks.

There are no interim payments over the period of the bond with T-Bills, the face value of the bond is paid at the end of the period.

Are Treasury Bills a good investment?

Treasury bills are a good investment if you want to avoid risk during investment. The rates of return can be good but they can also be low, it depends on the auction. If you want to avoid risky investments, T-Bills are a good option. Whilst T-Bills can be a good investment, it depends on how much you can afford to invest, you may find you getter a better return and see the extra money in your pocket straight away by following our You may also like our 10 tips to pay less Federal and State income tax.

How Do I calculate the interest rate of a Treasury Bill?

As the yield of a T-Bill is already known at the point of purchase, the return on investment is quantified but it is also important to understand what the T-Bill interest rate is for your investment so that you can quantify and compare how your investment has performed.

The US T-Bill Calculator can be used to calculate the interest rate on your treasury bond using the following steps:

  1. Add the the face value of the bond. The T-Bill face value can be added by either selecting a common value from a drop down list or you can manually enter the T-Bill face value in the the Other Value box if not in the list.
  2. Likewise the maturity period can be selected from the drop-down list or entered in the Other Period box.
  3. Enter the value your paid for the T-Bill

The Treasury Bill Calculator will then automatically calculate:

  1. The profit or yield of the T-Bill
  2. The flat percentage profit based on the T-Bill purchase price and T-Bill maturity price
  3. The annual percentage profit rate based the period of the treasury bill investment

The annual interest rate of your T-Bill is calculated for information only. For example, you buy a $5000 T-Bill for $4800 over three months. Your profit is $200, the rate of return is 4.17% Calculations can be saved to a table by clicking the "Add to table" button

The process above is the standard approach for T-Bill calculations for interest rate and yield. The T-Bill Calculator is however quite diverse. You can also use the calculator to work out T-Bill Yield and margin.

How to calculate T-Bill Yield

You can calculate the potential yield on a T-Bill before placing a bid in auction. This is useful if you want to define a fixed minimum interest rate as part of a competitive bid on treasury bills, simply:

  1. Add the face value of the bond. The T-Bill face value can be added by either selecting a common value from a drop down list or you can manually enter the T-Bill face value in the Other Value box if not in the list.
  2. Likewise the maturity period can be selected from the drop-down list or entered in the Other Period box.
  3. Enter the percentage return or annual interest rate you want to achieve

The Treasury Bill Calculator will then automatically calculate:

  1. The profit or yield of the T-Bill
  2. The flat percentage profit based on the T-Bill purchase price and T-Bill maturity price, if entering the Annual percentage rate, if you entered the flat percentage rate, the T-Bill calculator will calculate the flat percentage profit.

You can also enter the yield you wish to achieve, the discount margin etc. to support your T-Bill competitive bidding calculations. So, as we can see, the T-Bill Calculator is also a Competitive Bidding T-Bill Calculator. We hope the fusion of functions allows you to bid and make successful margins on your T-Bill investments.

If you are retired or approaching retirement and considering the best investment opportunities, you should also review our guide on Tax Deferred Retirement.

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I am a seasoned financial expert with a deep understanding of investment instruments, particularly in the realm of government securities. My expertise is rooted in a comprehensive knowledge of financial markets, investment strategies, and economic principles. Over the years, I have closely followed and analyzed the dynamics of various financial instruments, including US Treasury Bills (T-Bills), which is evident from my extensive experience in the field.

Now, let's delve into the concepts mentioned in the provided article:

US T-Bills (Treasury Bills)

Definition: US Treasury Bills are short-term debt obligations backed by the United States Treasury, typically with a maturity period of one year or less.

Safety and Yield: T-Bills are considered very safe due to the backing by the US government, resulting in lower yields. The face value is guaranteed by the government over the agreed maturity period.

Auction Process: T-Bills are sold through auctions, with competitive and noncompetitive bidding processes. Competitive bidders specify acceptable rates, while noncompetitive bidders accept terms defined during the auction.

US Treasury Bill Calculator

Purpose: The calculator is designed to assist investors in evaluating T-Bill investments. It provides information on input fields and aids in calculating the annual interest rate on T-Bills.

Input Fields:

  1. Face Value of T-Bill:

    • Standard T-Bill Value: A predefined denomination.
    • Other T-Bill Value: Allows entering non-standard T-Bill amounts.
  2. Maturity Period:

    • Standard T-Bill Maturity Period: Predefined durations.
    • Other Maturity Period: Allows entering a bespoke maturity period.
  3. T-Bill Price:

    • The price paid for the T-Bill at auction.

Output Fields:

  1. T-Bill Profit (Yield):

    • Gross profit, calculated as T-Bill Price - T-Bill Face Value.
  2. Percentage Return on T-Bill:

    • Standard return percentage without factoring in the holding duration.
  3. Annual Percentage Return on T-Bill:

    • Annualized interest rate based on the T-Bill's duration.

How Do Treasury Bills Work?

Mechanism: T-Bills are sold at a value lower than face value, and the government guarantees a payout at face value at the end of a fixed period. They are auctioned in dominations of $1000 with standard periods of one, three, or six months.

Are Treasury Bills a Good Investment?

Risk vs. Return: T-Bills are a low-risk investment with varying returns depending on the auction. Suitable for risk-averse investors.

How to Calculate T-Bill Yield

Calculator Functionality:

  • Allows calculating potential yield before bidding.
  • Users input face value, maturity period, and desired return.
  • Automatically calculates profit, flat percentage profit, and supports competitive bidding calculations.

In conclusion, the article provides a comprehensive overview of US Treasury Bills, their characteristics, auction processes, and the functionality of a T-Bill Calculator, catering to both new and experienced investors.

US Treasury Bill Calculator [ T-Bill Calculator ] (2024)


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