Treasury Bonds vs. Treasury Notes vs. Treasury Bills: What's the Difference?

Nov 21, 2023 By Triston Martin

How Treasurys Work

If the demand is great and bidders are willing to be able to pay more than face value to obtain an interest rate fixed. If the demand is low, the bidders pay less. The Treasury Department pays the interest rate every six months on bonds, notes, and TIPS. The interest rate is only paid when they reach maturity. If you hold on to Treasurys until their expiration date is reached, you'll get the face value in addition to the interest paid throughout the bonds. (You receive the face value, regardless of what you paid for Treasury during the auction). The minimum investment is $100. This puts them within range for many individuals who want to invest.

Do not confuse the interest rate similar to the Treasury yield. The yield is the return total throughout the bonds. Because Treasurys are auctioned off, the yields vary each week. If the demand is not high, the notes are sold at a lower price than their face value. The discount is comparable to getting the notes for sale. This means that the yield is very high. The buyers pay less than the fixed rate and thus get more value. But, when there is a high demand, it is possible to sell them at auction for more than their value. In the end, the yield will be lower. Buyers pay greater for the interest, which means they receive less on their money. The uncertainty that followed that 2008 crisis in the economy increased the demand for Treasurys. In reality, Treasurys reached record-high demand levels on June 1st and 2. The 10-year Treasury note yield fell to 1.47 percent, the lowest in more than 200 years.

Treasury Bonds

Treasury bonds, also known as T-bonds in short, are frequently called long bonds as they require the longest time to mature compared to the securities issued by the government. Treasury bonds are available to investors at a rate of between 20 and 30 years of maturity.


The purchasers of T-bonds get an annual fixed-interest payment of six months. When the bond matures, the purchaser gets paid the face amount for the bonds. Treasury bonds offer the highest rates of interest in comparison to Treasury bills and notes because the investors get paid to lock their funds over a long period. This is why the rates offered are more volatile than other kinds of investment by the government.

Treasury bonds are sold at monthly auctions online held by Treasury officials from the U.S. Treasury, where they are offered in multiples of $100. The price of a bond and its yield are determined at the time of the auction.

Treasury Notes

Treasury notes are like Treasury bonds; however, they come in shorter periods. Like T-bonds, Treasury notes are insured with Treasury notes funded by the U.S. government.


Treasury notes, also known as T-notes, pay an interest rate every six months until they reach maturity. Treasury notes generally pay less interest than bonds since they have a shorter maturity. Similar to T-bonds, their yields are determined by auction. At the time of completion, Treasury notes pay the face value of the bond.

Treasury notes are sold by U.S. Treasury and are sold in increments of $100. The note's value can change based on the outcome at the time of auction. It could be less, equal to, than, or higher than the face value of the note. Investors can avail the same options for redemption as Treasury bonds, and T-notes may be stored until maturity.

Treasury Bills

Treasury bills, also known as T-bills, have the shortest time frames and have maturities of 4, 8 13 26 as well as 52 weeks.


In contrast to Treasury notes and bonds, T-bills don't make periodic interest to investors. The buyer's profit corresponds to the amount that is less than the face value plus the discount paid at the purchase time. For instance, an investor could purchase a Treasury bill with a face value of $1,000 and a purchase price of $950. When the time comes to maturity, the investor receives $1,000. The difference of $50 between the $950 purchase price and the $1,000 face value is the interest. Similar to Treasury notes and bonds, T-bills are not subject to default as their own U.S. government guarantees them.

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