Treasury Bill vs Treasury Bond: Maturity, Interest and Risk
Short answer. Both are debt of the US government. A Treasury bill matures in one year or less, pays no coupon and is sold at a discount to face value, so your return is the difference. A Treasury bond matures in 20 or 30 years and pays a fixed coupon every six months, which makes its price far more sensitive to interest rates.
Side by side
| Treasury bill | Treasury bond | |
|---|---|---|
| Maturity | 4 weeks up to 52 weeks | 20 or 30 years |
| Interest | No coupon; bought at a discount, paid face value at maturity | Fixed coupon paid every six months |
| Minimum purchase | $100 at TreasuryDirect | $100 at TreasuryDirect |
| Interest rate risk | Low: short maturity | High: long duration |
| Credit risk | Backed by the US government | Backed by the US government |
| State income tax | Exempt | Exempt |
| Typical use | Parking cash, short-term safety | Locking in long-term yield, duration exposure |
Which one fits you?
Lean towards Treasury bill if…
- you need cash back soon and want stability
- you want to hold a safe alternative to a savings account
Lean towards Treasury bond if…
- you want to lock in a rate for decades
- you expect rates to fall and want price gains
Frequently asked questions
Are Treasuries risk-free?
They carry essentially no default risk, but bond prices fall when rates rise, so long bonds can lose value before maturity.
What about Treasury notes?
Notes sit between them, with maturities of 2 to 10 years and semiannual coupons.
Is the interest taxed?
Federal income tax applies, but Treasury interest is exempt from state and local income tax.
General education, not personal financial advice. Figures are typical US examples and vary by provider and year.