You can buy a 3-month Treasury bill two ways: directly from the U.S. government at TreasuryDirect.gov, or through a retail brokerage account at a firm like Fidelity, Schwab, or Vanguard. Either route lets you participate in the same weekly 13-week bill auctions, the minimum purchase is $100 in $100 increments, and recent 13-week bills have been yielding roughly 3.6% to 3.7% annually. The main difference isn’t the bill itself. It’s what happens if you need your money back before the 91 days are up.
TreasuryDirect or a Brokerage: Pick First
Before you open anything, decide where the bill will live. The choice affects fees a little and flexibility a lot.
TreasuryDirect is the government’s own platform, operated by the Bureau of the Fiscal Service.1TreasuryDirect. TreasuryDirect Home You buy directly at auction, no middleman, no fees. The interface is dated, and if you need to sell before maturity you’ll face a mandatory 45-day holding period followed by a paper form and a bank signature guarantee just to transfer the bill out to a broker who can sell it.2TreasuryDirect. User Guide Sections 261 Through 270
A brokerage account lets you buy at the same Treasury auctions and also buy existing bills on the secondary market. Most major online brokerages charge no commission for Treasury purchases placed online. Fidelity, for example, charges nothing for auction or secondary market Treasury trades online; calling a representative to place the trade runs around $20. Your T-bills sit in the same portfolio as your other investments, and selling early is a normal trade.
If you already have a brokerage account and there’s any chance you’ll want out early, use the brokerage. If you’re confident the money can sit for three months and you’d rather deal directly with Treasury, TreasuryDirect works fine.
Setting Up a TreasuryDirect Account
Have this ready before you start the online application:
- Social Security Number or ITIN, for federal tax reporting on interest earned.
- U.S. bank routing and account numbers. TreasuryDirect uses this account to pull purchase funds and to deposit proceeds at maturity.
- An email address for auction confirmations and account alerts.
- A permanent U.S. mailing address.
Most individual accounts are verified automatically through federal databases. When automatic verification fails, TreasuryDirect will ask you to submit FS Form 5444 with a signature certified in person by a certifying officer at a bank or credit union. Notary certification alone won’t satisfy this requirement. This paper step catches people off guard in what looks like a fully online process; if you get the request, most banks can certify the form the same day.
Entity accounts (for a trust or business) require FS Form 5444 up front, signed before a certifying officer and mailed in.3Department of the Treasury. TreasuryDirect Account Authorization FS Form 5444 Individual accounts can also name a beneficiary on securities held in single-ownership registrations; entity accounts cannot.
Placing the Order on TreasuryDirect
Once the account is active and linked to your bank:
- Log in and click the BuyDirect tab.
- Under Bills, select the 13-week option. That’s your 3-month bill.
- Enter the dollar amount. Minimum $100, in $100 increments.4TreasuryDirect. Treasury Bills
- Confirm your linked bank account as the funding source.
- Review the auction date and issue date, then submit.
Submitting creates a binding commitment to buy at whatever rate the auction produces. Your bank account isn’t debited on auction day. Funds are pulled on the issue date, which for 13-week bills is typically the Thursday after the Monday auction.5TreasuryDirect. General Auction Timing After issuance the bill appears in your holdings and you’ll get an email confirmation showing the exact discount rate applied.
Placing the Order Through a Brokerage
Go to your brokerage’s fixed-income or bond section and filter for Treasury bills with a 13-week or 3-month maturity. You’ll typically see both upcoming auction listings and secondary market offerings. For an auction purchase you place a non-competitive bid, the same as on TreasuryDirect. For a secondary market purchase you see a quoted price and buy at that price.
The minimum is the same $100 in $100 increments.4TreasuryDirect. Treasury Bills The biggest practical advantage is that if you change your mind, you can sell with a few clicks instead of mailing forms.
The Auction and How Pricing Works
The Treasury holds 13-week bill auctions every week. The standard cycle is announcement on Thursday, auction the following Monday, issuance the Thursday after the auction. Holidays occasionally shift these dates, and TreasuryDirect posts the upcoming schedule.6TreasuryDirect. Upcoming Auctions
Treasury bills pay no coupon. You buy at a discount and receive the full face value at maturity, and the difference is your return. If a $1,000 13-week bill sells at auction with a discount rate of 3.63%, you’d pay roughly $990.83 and receive $1,000 about 91 days later. That $9.17 gap is your interest income, even though no periodic payment ever hits your account.7TreasuryDirect. Understanding Pricing and Interest Rates
Almost every individual investor should place a non-competitive bid, which accepts whatever discount rate the auction produces and guarantees your order gets filled. You can bid up to $10 million per auction non-competitively.8TreasuryDirect. Treasury Auction Rules Competitive bids let you specify a rate but risk going unfilled if the auction clears lower, and the potential rate improvement isn’t worth that risk for most retail investors.
What Happens at Maturity
When the bill matures, the full face value is deposited into your linked bank account (through TreasuryDirect) or credited to your brokerage cash balance. No action needed.9TreasuryDirect. Redeem/Reinvest Treasury Bills The full face value comes back, not just the interest: if you paid $9,908 for $10,000 in bills, you receive the full $10,000, and the $92 difference is your earnings.
If you want to keep rolling the money into new 13-week bills automatically, TreasuryDirect lets you schedule up to seven consecutive reinvestments on a 13-week bill, covering roughly two years of rollovers.10U.S. Department of the Treasury. Reinvesting a Treasury Marketable Security You can set it up at the time of purchase or add it later through ManageDirect. To cancel or modify, do it at least four business days before the next auction, or you’re committed to that cycle. Most brokerages offer their own automatic reinvestment for Treasury auction purchases; check the fixed-income settings.
Selling Before the 91 Days Are Up
This is where the two platforms diverge sharply.
Through a brokerage, you place a sell order in the secondary market. The bill’s price reflects current interest rates: if rates have risen since you bought, you’ll get slightly less than you paid; if rates have fallen, slightly more. The trade settles in a business day or two.
Through TreasuryDirect, you can’t sell from the platform at all. You must transfer the bill to a broker first by completing FS Form 5511, having it signed before a certifying officer at a bank, and mailing it to Treasury Retail Securities Services. The bill must have been held at least 45 days after original issuance before any transfer is allowed, which means more than half of a 13-week bill’s life has already passed before you can even start the process.2TreasuryDirect. User Guide Sections 261 Through 270 Once the broker receives the bill, they can sell on your behalf. The whole process can take a week or more.
How the Interest Is Taxed
The discount you earn is federally taxable in the year the bill matures, or the year you sell it if you sell early. It’s reported on Form 1099-INT.11Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID TreasuryDirect posts your 1099-INT by January 31 of the following year and emails when it’s ready.12U.S. Department of the Treasury. 1099 Tax Statements for Paper Savings Bonds and TreasuryDirect Brokerages include the same figures in their consolidated 1099.
T-bill interest is exempt from state and local income tax.13Office of the Law Revision Counsel. 31 USC 3124 – Exemption From Taxation In a high-tax state, that exemption can push the after-tax yield on a T-bill above a bank CD or savings account paying a slightly higher nominal rate. Run the comparison before assuming a bank product paying 4% beats a T-bill paying 3.7%.