Glossary
Treasury bill
A Treasury bill (T-bill) is short-term US government debt, maturing in 4 to 52 weeks, sold at a discount to its face value; the difference is your interest, which is exempt from state and local income tax.
You can buy T-bills at TreasuryDirect or through a brokerage. Compare T-bill yields with savings and CD APYs after tax: in states with an income tax, a T-bill can keep more even at a lower yield.
Work it out
Related terms
- I bondA US savings bond whose rate combines a fixed rate for life with an inflation rate reset every six months, so it keeps pace with inflation; you can buy up to $10,000 a year.
- CD (certificate of deposit)A bank deposit that earns a fixed APY for a set term, from a few months to five years or more, in exchange for a penalty if you withdraw early.
- APY (annual percentage yield)The percentage a deposit earns in a year, counting compounding: the figure banks must quote for savings accounts, money market accounts and CDs.
Sources: TreasuryDirect: Treasury bills · 31 U.S.C. 3124