Investing Education · Every Dollar Grows
Treasury Securities Explained: Bills, Notes, Bonds, TIPS & I Bonds
Compare U.S. Treasury bills, notes, bonds, TIPS, floating-rate notes, and I Bonds—and learn how maturity, inflation protection, liquidity, and interest-rate risk change the job each one can do.
Quick answer
U.S. Treasury securities are not one single product. Marketable Treasuries include bills, notes, bonds, Treasury Inflation-Protected Securities (TIPS), and Floating Rate Notes (FRNs). I Bonds and EE Bonds are savings bonds with different rules. The best way to understand them is to start with the job the money must do, then match the term, inflation protection, access, and market risk to that job.
U.S. Treasury Yields — Market Snapshot
The Treasury market does not have one interest rate. Short-, intermediate-, and long-term yields can move differently as expectations about Federal Reserve policy, inflation, and future economic conditions change.
Educational market snapshot: Market data is provided by TradingView and may be delayed. These market yield references are not guaranteed rates available on a future Treasury purchase. Treasury auction results and secondary-market prices change over time.
Treasury Securities Explained: Match the Security to the Job
Choose the job you are trying to understand. This tool does not select an investment for you—it shows which Treasury category is designed around similar characteristics and what tradeoffs deserve attention.
4 to 52 weeks
Designed around short maturities
Treasury bills mature in one year or less. They are commonly used when an investor wants a specific short maturity without taking the larger price sensitivity associated with long-duration Treasury bonds.
Marketable Treasuries vs. Savings Bonds
The first distinction to make is whether the security is marketable or a savings bond.
| Feature | Marketable Treasuries | Savings Bonds |
|---|---|---|
| Examples | Bills, notes, bonds, TIPS, FRNs | I Bonds and EE Bonds |
| Can be sold in secondary market? | Yes | No |
| Issued through auction? | Yes | No |
| Market price can fluctuate? | Yes, before maturity | Not traded in a secondary market |
| Where purchased? | TreasuryDirect or bank/broker/dealer | TreasuryDirect |
This distinction explains why an I Bond should not be treated as though it were simply another Treasury note or TIPS.
Treasury Bills: Short-Term Government Securities
Treasury bills are the shortest regularly issued marketable Treasury securities.
Current regular bill terms include:
Bills are sold at face value or at a discount. When a discounted bill matures, Treasury pays the face value; the difference between the purchase price and face value is the investor’s interest.
Where bills can be useful educationally
Bills are often associated with money that has a relatively short known time horizon. The tradeoff is reinvestment risk: when the bill matures, the next available rate may be higher or lower.
Treasury Notes: 2 to 10 Years
Treasury notes are currently issued with maturities of:
- 2 years
- 3 years
- 5 years
- 7 years
- 10 years
Notes pay a fixed rate of interest every six months until maturity.
Because notes have longer maturities than bills, their market values can respond more noticeably to changes in interest rates. A note held to maturity has a different experience from a note that must be sold while market rates have changed.
Treasury Bonds: 20- and 30-Year Maturities
Treasury bonds currently come in 20- and 30-year maturities and pay interest every six months.
Their long maturity creates an important tradeoff: they can lock in a fixed coupon for decades, but their market prices can also react strongly when interest rates change.
For the mechanics behind that relationship, see Bonds for Beginners.
TIPS: Marketable Inflation-Protected Treasuries
Treasury Inflation-Protected Securities, or TIPS, are currently issued in 5-, 10-, and 30-year terms.
The defining feature is that TIPS principal adjusts with inflation and deflation measures tied to the Consumer Price Index.
The coupon rate itself is fixed, but the interest payment can change because that fixed rate is applied to an inflation-adjusted principal amount.
What happens at maturity?
If the inflation-adjusted principal is higher than the original principal, Treasury pays the higher amount. If the adjusted principal is equal to or below the original amount, Treasury pays the original principal at maturity.
TIPS still have market risk
TIPS trade in the market. Their prices can rise or fall before maturity as real interest rates and other market conditions change.
Floating Rate Notes: A Treasury Rate That Resets
Floating Rate Notes are 2-year marketable Treasury securities. Unlike a conventional Treasury note with a fixed interest rate, an FRN’s interest rate changes over time.
The floating rate is tied to 13-week Treasury bill rates plus a spread determined at auction. FRNs pay interest every three months.
I Bonds: Inflation-Linked Savings Bonds
Series I savings bonds are not marketable Treasury securities. They are savings bonds designed to earn a composite rate made from two parts:
- A fixed rate that stays with the bond
- An inflation rate that resets every six months
The bond can earn interest for up to 30 years unless it is redeemed earlier.
I Bond liquidity rules matter
- You cannot redeem an I Bond during its first 12 months.
- If redeemed before five years, the final three months of interest are forfeited.
- I Bonds are not sold in a secondary market.
Electronic I Bonds are currently purchased through TreasuryDirect, and the annual electronic purchase limit is currently $10,000 per Social Security Number or Employer Identification Number.
Treasury Securities Comparison Table
| Security | Typical Term | Interest Structure | Marketable? | Main Tradeoff to Understand |
|---|---|---|---|---|
| Treasury Bills | 4–52 weeks | Usually discount-to-face-value structure | Yes | Reinvestment risk |
| Treasury Notes | 2, 3, 5, 7, 10 years | Fixed interest every six months | Yes | Interest-rate risk increases with duration |
| Treasury Bonds | 20 or 30 years | Fixed interest every six months | Yes | High sensitivity to long-term rate changes |
| TIPS | 5, 10, 30 years | Fixed rate applied to inflation-adjusted principal | Yes | Real-rate and market-price risk |
| FRNs | 2 years | Floating rate; interest quarterly | Yes | Income changes with short-term rates |
| I Bonds | Earn up to 30 years | Fixed rate + inflation component | No | 12-month lockup and early-redemption penalty |
TreasuryDirect vs. Brokerage: Where You Buy Matters
Marketable Treasuries can be purchased at auction through TreasuryDirect or through a bank, broker, or dealer. They can also trade in the secondary market through financial institutions.
| Feature | TreasuryDirect | Brokerage |
|---|---|---|
| New Treasury auctions | Yes, noncompetitive bids | Usually available depending on broker |
| Secondary-market Treasuries | Not a trading platform | Often available |
| I Bonds | Yes | No direct purchase of new I Bonds |
| Automatic reinvestment | Available for eligible marketable securities | Features vary by broker |
| Selling a Treasury before maturity | Requires transfer to a bank, broker, or dealer before sale | Can generally sell through the brokerage platform |
The important question is not simply where the purchase is easiest. Consider how you would hold, reinvest, transfer, or sell the security later.
What Is a Treasury Ladder?
A Treasury ladder divides money among securities with different maturity dates rather than putting the full amount into one maturity.
Simple educational example
The exact securities and maturity spacing depend on the goal. The concept is simply to create multiple maturity dates instead of one.
A ladder can reduce the risk of having all the money mature when rates happen to be unusually low, while also creating scheduled access to portions of the principal.
TIPS vs. I Bonds: Two Very Different Inflation Tools
| Feature | TIPS | I Bonds |
|---|---|---|
| Type | Marketable Treasury security | Savings bond |
| Can market price change? | Yes | No secondary-market price |
| Inflation mechanism | Principal adjusts with inflation measure | Inflation component of composite rate resets periodically |
| Liquidity | Can generally be sold in secondary market | Cannot redeem first 12 months |
| Purchase limits | Large auction limits apply | Annual savings-bond purchase limit |
| Maturity | 5, 10, or 30 years | Earns interest up to 30 years |
The shared word inflation does not make these products interchangeable.
Treasury Risks Beginners Often Miss
1. Interest-rate risk
A marketable Treasury can lose value before maturity when market yields rise. Longer-duration securities usually react more.
2. Reinvestment risk
A short Treasury can mature safely and still leave you with a problem if the available rate is much lower when you reinvest.
3. Inflation risk
A fixed payment can lose purchasing power even when every promised dollar is paid.
4. Selling before maturity
Government backing of principal at maturity does not mean a marketable Treasury can always be sold early for the amount originally invested.
5. Using the wrong maturity for the goal
A 30-year Treasury and a 13-week bill are both Treasury securities, but they solve very different problems.
6. Confusing I Bonds with TIPS
They use different inflation mechanisms, liquidity rules, purchase systems, and market structures.
7. Chasing the highest displayed yield
Yield should be considered together with maturity, reinvestment risk, inflation exposure, and when the money will actually be needed.
Treasury Security Beginner Checklist
- Start with the date the money may be needed.
- Decide whether you need a marketable security or savings bond.
- Check the exact maturity or redemption rules.
- Understand whether the return is fixed, floating, discount based, or inflation linked.
- Know whether the security can be sold before maturity.
- Consider interest-rate risk before choosing a long maturity.
- Consider reinvestment risk before repeatedly using short maturities.
- Read current TreasuryDirect rules instead of relying on an old rate or purchase limit.
- If comparing TIPS and I Bonds, compare their inflation mechanisms and liquidity separately.
- Choose the Treasury security for a defined portfolio or cash-management job—not simply because its current yield is highest.
Helpful Primary Sources
Frequently Asked Questions
What is the difference between Treasury bills, notes, and bonds?
The primary difference is maturity. Treasury bills mature in one year or less, notes currently mature in 2, 3, 5, 7, or 10 years, and Treasury bonds currently mature in 20 or 30 years.
Are Treasury securities risk-free?
U.S. Treasury securities are backed by the full faith and credit of the United States for promised payments, but that does not eliminate interest-rate risk, inflation risk, reinvestment risk, or the possibility of a market loss if a marketable Treasury is sold before maturity.
Can Treasury bills lose money?
A bill held until maturity has a known maturity payment according to its terms, but selling a marketable Treasury before maturity can produce a different result. Investors also face reinvestment and inflation risk.
What is the difference between TIPS and I Bonds?
TIPS are marketable Treasury securities whose principal adjusts with inflation measures. I Bonds are nonmarketable savings bonds with a composite interest rate that includes a fixed rate and an inflation component.
Can I sell an I Bond?
No. I Bonds do not trade in a secondary market. They can generally be redeemed after 12 months, and redeeming before five years results in forfeiting the final three months of interest.
Can I buy Treasuries through a brokerage instead of TreasuryDirect?
Yes. Marketable Treasury securities can be purchased through banks, brokers, or dealers as well as through TreasuryDirect. Brokerage platforms may also provide access to the secondary Treasury market.
What is a Treasury ladder?
A Treasury ladder spreads money among multiple maturity dates rather than placing the entire amount into one maturity. As portions mature, the investor can spend, hold, or reinvest the proceeds.
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