Treasury Bills, Notes, and Bonds
The Federal Reserve agreed to buy a boatload of Treasurys hoping to keep rates low. Check out the financial websites for the reasons. Keeping it simple here, I want to focus on the difference between T-Bills, notes, and bonds. We often hear them cited, almost interchangeably, but many don’t know the difference. First, the similarities: they are all U.S. government debt. The difference is in the length of maturity.
- Treasury bills (T-Bills) – 1 year or less maturity and pays interest ONLY at maturity
- Treasury notes – debt issued with two to 10 years maturity
- Treasury bonds – debt issued with maturity terms longer than 10 years
Pretty simple. Don’t get confused – if a 28-year-old bond matures in a couple years, it is still called a bond (not a note). The name refers to the maturity length WHEN ISSUED.
Read on:
Investopedia – What’s the difference between bills, notes and bonds?
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