Exploring the Difference Between U.S. Bonds, Bills, and Notes

Exploring the Difference Between U.S. Bonds, Bills, and Notes

4 Min.

The US government issues different forms of debt, such as savings bonds, T-bills, and T-notes, to support its operations. Bonds offer the highest interest payments and usually mature in 20-30 years. T-notes have a shorter maturity period, typically between 2-10 years, and pay interest twice a year. T-bills have the shortest maturity period, ranging from four weeks to one year. All three can be traded in the secondary market, except for savings bonds, which are registered to only one owner.


The practice of financing operations through the sale of national debt traces its roots to the Revolutionary War, as per the US Treasury Department. In 1929, the inaugural issuance of Treasury Bills marked the onset of government debt instruments, later joined by the immensely popular US savings bonds in 1935, culminating with the introduction of Treasury notes. Diverse investment products, namely US savings bonds, Treasury bills, and notes, constitute avenues through which the US government secures funding for its operations. Investors essentially lend funds to the federal government and accrue profits in return.

Evolution of US Savings Bonds

The original savings avenue for small American investors, US savings bonds, enjoys the backing of the complete faith and credit of the US government. Unlike other government debt instruments, savings bonds are uniquely registered to a sole owner and lack transferability. While they cannot be resold, they are inheritable and subject to early redemption with an associated interest penalty.

Savings bonds, discontinued in paper form since 2012, are no longer available at banks or post offices. Presently, they can exclusively be acquired through the TreasuryDirect website.

Prominent among investor choices are Series EE and Series I bonds, often included in certain company retirement plans. Series EE bonds can be procured in denominations ranging from $25 to $10,000, ensuring a minimum doubling of value within 20 years and potential interest accrual for up to 30 years. Featuring built-in protection against inflation, Series I savings bonds present a fixed return rate supplemented by a variable inflation rate tied to the Consumer Price Index (CPI). These bonds can earn interest for up to 30 years.

US Treasury Bills: Short-Term Investments With Minimal Risk

Termed as T-bills, US Treasury bills are defined as short-term investments, maturing in one year or less and typically sold at a discount to their face value. Despite paying no interest, investors acquire T-bills below their par value, receiving the full face value upon maturity. The variance between the purchase and face value constitutes the investor's return. For instance, a $100 T-bill acquired at a discount of $97 would yield the full $100 at maturity, resulting in a $3 return. Treasury bills are available for purchase through banks, brokers, or the TreasuryDirect.gov website.

Due to their brief duration and nearly risk-free nature, T-bills are recognized as exceedingly secure and liquid securities. They play a foundational role in critical markets such as the overnight interbank repo market, money market funds, and the commercial paper market.

US Treasury Notes: Short-Term Fixed-Rate Investments

Known as T-notes, Treasury notes share similarities with Treasury bonds but distinguish themselves as short-term investments. Issued in $100 increments, these notes span durations of two, three, five, seven, and 10 years, providing investors with fixed interest payments biannually until the note matures.

Sold through government auctions, Treasury notes permit buyers to submit competitive bids specifying a yield or non-competitive bids accepting the auction-determined yield. Similar to T-bills, T-notes are accessible through banks, brokers, or the TreasuryDirect.gov website.

Safety and Modest Returns in US Government Debt Investments

For individual investors, US government debt offers a secure investment with a moderate return. Widely acknowledged as among the safest investments globally, these bonds yield modestly for investors, with short-term T-bills earning solely the risk-free rate of return. The US government maintains an unblemished record, having never defaulted on any of its bond obligations.


the US government utilizes diverse debt instruments like savings bonds, T-bills, and T-notes for funding. Bonds have extended maturity (20-30 years), T-notes offer mid-range durations (2-10 years), and T-bills provide short-term options (4 weeks to 1 year). While T-bills can be traded in the secondary market, savings bonds are exempt. Despite differences, these instruments collectively support the government's financial stability.

Treasury Bill
Treasury Note
U.S. Treasury
U.S. Savings Bond