How to Buy Treasury Bills on Fidelity

Larry, Managing Editor

how to buy treasury bills on fidelity

Treasury bills are one of the most attractive yield opportunities in the market today, offering over 5% yield. Treasuries are extremely safe and liquid investments issued and backed by the U.S. government and offer investors the opportunity to obtain risk-free yield with guaranteed repayment. We’ll show you how to buy Treasury bills on Fidelity in this step-by-step guide.

How to Buy Treasury Bills on Fidelity: A Step-by-Step Guide

To start, log into your Fidelity account. You can follow these step-by-step instructions on how to buy Treasury bills on Fidelity.

1. Log into your Fidelity account. 

2. Click the “Products” tab and select “Fixed income, bonds, and CDs” from the dropdown menu. Then, click “Search for investments.”

step 2 fidelity fixed income bonds and cds

3. Click on the “New Issues” tab in the table below.

step 3 fidelity select new issues tab

4. Expand the “Treasury” offering to see the list of new-issue Treasury products.

step 4 fidelity treasury list

If you don’t see any Treasury bills in the list (or Treasury notes and Treasury bonds if those are what you’re looking for), check the U.S. Treasury auction schedule to see when the next auction is. Chances are, it will be within a few weeks.

You’ll see three dates: the announcement date, the auction date, and the settlement date.

The announcement date is when the new-issue Treasury bonds will appear for purchase. The auction date is when the order you placed will be filled. The settlement date is when the orders will settle in your account.

Be sure to place an order before the auction date, as the new-issue bonds will stop being offered on the auction date (when the orders are filled).

5. Preview your order.

step 5 fidelity buy treasury bill

In the quantity field, enter how many Treasury bills you want to purchase. Remember that each bond has a face value of $1,000 and that you buy T-bills at a discount. A quantity of 1 means you will purchase a T-bill at a discount to the $1,000.

Fidelity has an Auto Roll option, so you can automatically buy another Treasury of the same term and the same amount when this Treasury matures. This is most often used with short-term Treasury Bills. The Treasury that is maturing will cover the new T-bill purchase, so ignore any alerts from Fidelity about a low cash balance to cover the auto roll purchase.

Congrats! You know now how to buy Treasury bills on Fidelity! With a few button clicks, you now own Treasury bills directly backed by the U.S. government.

The Opportunity of Treasury Bill Yields

Treasury bills are extremely safe, liquid, and offer higher yields than what you have in your savings or checking account. Fidelity does offer other cash investments with competitive yields. For example, Fidelity offers a selection of brokered CDs that pay similar rates.

Many banks and credit unions were slow to increase the rates on savings accounts and bank CDs since they wanted to take advantage of people not actively moving their money to higher-yielding instruments.

How Much Money Do I Need to Buy a T-Bill?

The typical minimum order for a new-issue Treasury is $1,000 in face value when you buy it on Fidelity. 

When you buy a T-Bill, you buy the T-Bill at a discount to face value, meaning you’ll be paying less than $1,000 for each $1,000 bill. The interest you earn is the difference between what you pay for the T-bill versus the $1,000 you automatically receive at maturity.

What Happens When My T-Bills Mature on Fidelity?

You don’t need to do anything when your T-Bills mature on Fidelity. When a T-Bill matures on Fidelity, you receive the total face value of the bill, which is $1,000 per bill. You bought it at a discount before, so the difference between what you paid and the face value of the T-Bill is the interest you’ve earned.

Fidelity will automatically credit your account with the principal amount.

What Kind of Taxes Do I Pay on Fidelity?

The interest you earn from Treasury bills is subject to federal income taxes. The interest income is exempt from state and local tax. Interest earned from Treasuries are not taxed as capital gains. The only time you’ll pay capital gains taxes is if you sell your Treasury bill before the maturity date for more than what you paid for it. If you sell it for less than what you paid, you have a capital loss.

Your brokerage typically sends you the necessary tax forms after the year ends.

Does Fidelity Charge a Fee to Buy Treasury Bills?

Fidelity does not charge a fee for purchasing new-issue T-Bills. If you need the help of a Fidelity representative, there is a flat rate of $19.95 per transaction. But generally, we recommend you buy Treasuries online to avoid this significant fee.

What are Fidelity’s Treasury Bill Rates?

Fidelity’s Treasury bill rates are on their Fixed Income, Bonds & CDs landing page

This page shows the 3-month, 6-month, 9-month, and 1-year Treasury bill rates.

Are Treasury Bills Cash Equivalents?

Treasury bills are considered cash equivalents in your investment portfolio. They have some advantages when compared to savings accounts. Treasury bills are low-risk investments backed by the U.S. government, making them a safe choice for investors. They also offer higher yields than most savings accounts, providing the potential for higher returns on your investment.

Does Fidelity Offer T-Bill Funds?

​​Fidelity doesn’t offer a fund solely dedicated to T-Bills. However, it has various money market funds that primarily hold T-Bills as part of a diversified portfolio of low-risk assets. 

Some examples might include:

  • Fidelity Government Money Market Fund (SPAXX)
  • Fidelity Treasury Money Market Fund (FZFXX)
  • Fidelity Short-Term Treasury Bond Index Fund (FUMBX)

These funds hold other investments besides T-Bills, such as Treasury Notes, other government securities, or repurchase agreements. Government money market funds are safer and exclusively hold U.S. government-backed debt, like T-Bills.

Is It Easy to Create a T-Bill Ladder on Fidelity?

Creating a T-Bill ladder on Fidelity is straightforward and can provide a flexible investment strategy. A T-Bill ladder strategy involves buying a series of Treasury Bills with staggered maturities. By doing this, you can maximize T-Bill returns while maintaining liquidity.

A ladder that uses Treasuries is more flexible than using other securities such as long-term bonds or CDs. T-Bills have shorter maturities, allowing you to reinvest or access funds more frequently. Additionally, T-Bills are highly liquid and can be easily sold through any broker.

To create a T-Bill ladder on Fidelity, you can start by logging into your account and selecting the ‘Trade’ option. You can choose the ‘Fixed Income’ section and search for available Treasury Bills. By carefully selecting T-Bills with different maturity dates, you can optimize your returns while maintaining liquidity.

Should I Buy T-Bills on Fidelity?

Buying Treasury bills on Fidelity is a straightforward process that can be done online. Fidelity ensures you get the best yield during the auction, offering a convenient and efficient way to invest in these government-backed securities. Fidelity gives you the benefit of accessing the secondary market, and the Treasury bill market is one of the most liquid in the world. With a low minimum investment, tax exemption, and guaranteed liquidity, Treasury bills offer a compelling investment option for those looking for a stable and reliable investment. If you have other brokerage accounts, you may be interested in how to purchase T-Bills on other platforms.