Treasury bills through Fidelity work like any other bond purchase, but the process is simpler than you might expect

You can buy U.S. Treasury bills directly through Fidelity using either their website or a phone call to their trading desk. Treasury bills are short-term government debt that mature in four weeks to one year, and they're sold at a discount — you pay less than face value upfront and receive the full amount at maturity. Fidelity handles the purchase, holds the bills in your account, and manages the redemption when they mature.

The main routes are the secondary market (buying bills someone else is selling) or TreasuryDirect through Fidelity (buying directly from the U.S. Department of the Treasury during their weekly auctions). Most individual investors use the secondary market because it's faster and doesn't require waiting for an auction schedule.

Key Takeaways

  • You need a Fidelity brokerage account with cash or margin available to purchase Treasury bills.
  • The secondary market lets you buy bills any trading day, while TreasuryDirect auctions happen on a fixed weekly schedule set by the Treasury Department.
  • Treasury bills carry no commission through Fidelity, but you may pay a small spread (the difference between bid and ask prices) on secondary market purchases.
  • Bills mature automatically and the proceeds deposit back into your Fidelity account without any action required on your part.

Setting up your Fidelity account for Treasury bill purchases

You need an active Fidelity brokerage account — either a taxable account, IRA, or other retirement account type. Log into your account and confirm you have cash available or margin available (if your account is margin-enabled). The cash sits in your settlement fund or money market fund until you place an order.

If you don't have a Fidelity account yet, you'll need to open one before purchasing. This takes about 10 minutes online and requires your Social Security number, address, and employment information. Once the account is funded with cash, you're ready to buy.

Buying Treasury bills on the secondary market

The secondary market is where most individual investors buy Treasury bills because you can purchase any trading day without waiting for an auction. Log into Fidelity's website or mobile app, go to the Fixed Income or Bonds section, and search for Treasury bills by maturity date or ticker symbol.

You'll see a list of available bills with their current prices, yields, and bid-ask spreads. Select the bill that matches your timeline — for example, if you want money back in three months, look for a bill maturing in roughly 13 weeks. Click to purchase, enter the quantity (bills are sold in $1,000 increments), and confirm the order. The transaction settles in one business day, and the bill appears in your account holdings.

Fidelity charges no commission on Treasury bill purchases, but you'll pay the spread — the difference between what sellers are asking and what buyers are bidding. On Treasury bills, this spread is usually very small, often just a few cents per $1,000 bill, because the market is highly liquid.

Buying Treasury bills through TreasuryDirect auctions

Fidelity also lets you bid on Treasury bills during the U.S. Department of the Treasury's weekly auctions. The Treasury holds auctions every Monday (or Tuesday if Monday is a holiday) for four-week and 13-week bills, and every four weeks for 26-week bills. You place your bid through Fidelity before the auction deadline, and if your bid is accepted, the bill settles a few days later.

The advantage of auctions is that you may get a slightly better rate than the secondary market offers at that moment. The disadvantage is that you have to wait for the next scheduled auction and can't choose your exact purchase date. To bid, go to Fidelity's Treasury section, select "Auction" or "New Issue," choose the bill maturity you want, enter your bid amount, and submit before the deadline (typically 11:30 a.m. ET on auction day).

Understanding Treasury bill yields and pricing

Treasury bills don't pay interest in the traditional sense. Instead, you buy them at a discount and receive full face value at maturity. If you pay $9,950 for a $10,000 bill maturing in 13 weeks, your $50 gain is your return. Fidelity displays this as a discount yield or bond equivalent yield — the annualized percentage return you'll earn.

The yield changes daily based on market demand and Federal Reserve policy. When interest rates are rising, Treasury bill yields rise too, and prices fall (because new bills offer better returns). When rates are falling, yields drop and prices rise. If you hold a bill to maturity, price changes don't matter — you get the full face value regardless. If you sell before maturity on the secondary market, you'll receive whatever the current market price is.

What happens when your Treasury bills mature

You don't need to do anything when a Treasury bill matures. Fidelity automatically redeems it at face value and deposits the proceeds into your account's cash settlement fund. This typically happens on the maturity date or the next business day. The money is then available to reinvest, withdraw, or hold in your money market fund.

If you want to buy new bills regularly, you can set up a ladder — purchasing bills with different maturity dates so that one matures every few weeks or months. This gives you a steady stream of cash to reinvest and lets you take advantage of changing yields over time.

Taxes and Treasury bills in different account types

Treasury bill interest (the discount you earn) is subject to federal income tax but exempt from state and local income tax. If you hold bills in a taxable brokerage account, you'll report the gain on your tax return for the year the bill matures. Fidelity will send you a 1099-INT form showing the interest earned.

If you hold Treasury bills in an IRA or other tax-deferred retirement account, you won't owe tax on the gains until you withdraw from the account (or never, in the case of a Roth IRA). This makes Treasury bills a tax-efficient choice for retirement accounts, especially if you're in a high tax bracket.

Frequently Asked Questions

Can I buy Treasury bills with a small amount of money?

Yes. Treasury bills are sold in $1,000 increments, so you can start with as little as $1,000. Fidelity has no minimum account balance for Treasury bill purchases, though some accounts may have a minimum to open.

What's the difference between a Treasury bill and a Treasury note?

Treasury bills mature in one year or less, while Treasury notes mature in 2 to 10 years. Bills are simpler and less sensitive to interest rate changes, while notes typically offer higher yields because you're lending for longer. Both are purchased the same way through Fidelity.

Can I sell a Treasury bill before it matures?

Yes. You can sell any Treasury bill on the secondary market before maturity through Fidelity. The price you receive depends on current market conditions and interest rates. If rates have risen since you bought, you'll receive less than you paid; if rates have fallen, you'll receive more.

Do I need a margin account to buy Treasury bills?

No. You can buy Treasury bills with cash in a standard brokerage account. A margin account is not required, though it's available if you want to borrow against your holdings.

How do I know what yield I'm getting?

Fidelity displays the yield for each Treasury bill in the trading screen before you purchase. It shows both the discount yield and the bond equivalent yield — use the bond equivalent yield to compare against other investments, as it's the standard way to quote Treasury returns.