Treasury Bill , also in short, T-bill, is traded at a discount from apparent face value. This bill is usually a short-term investment and takes less than a year to attain maturity. Yo pay par minus interest when purchased, and when mature, you get back par value.

The interest of Treasury Bill is determined by competitive bid in an auction. Large bank, money center making the bid for the bill. They submitted a bid with a yield (to 2 decimal places) on a bank discount basis. Their bid determine the price/interest rate.

Individuals buy Treasury Bill using non-competitive bid. Non-competitive bid does not have to submit a price or yield. Non-competitive bids allow you to buy T-bills at the average accepted competitive bid in the auction. You will have to accept their price. The price generally is not out of the line.

Individuals can create an account at Treasury Direct, and buy 4-week, 13-week, 26-week and 52-week Bill. You are guaranteed to receive the bill in the full amount you want. The price is determined by non-competitive bid described as above.

All bills except 52-week bills are auctioned every week. The 52-week bill is auctioned every four weeks. In a single auction, an investor can buy up to $5 million in bills by non-competitive bidding or up to 35% of the initial offering amount by competitive bidding. That is $5 million guarteed by US goverment for an individual, much better than FDIC.

You can place your bid directly through TreasuryDirect. There is no commissions or fees.