First Purchase from TreasuryDirect.gov

I've read about treasury bills in passing for a long time, and finally had a reason to try out the site & the system: my timeline for a home purchase recently shortened, so I needed a secure, short-term holding place for my $. [Enter TreasuryDirect.gov.]

On Tuesday, I bid for my first T-bill straight from the federal government, and the auction finally being settled last night, I'm now the proud owner of my first 4-week T-bill!

Sold in denominations of $1000, T-bills are exempt from both state and local tax (unfortunately, federal taxes still apply). When you bid for a T-bill, you're purchasing "at a discount from par," i.e. you pay $996 for the T-bill, and are paid the full $1000 when it matures. You can bid for a T-bill one of two ways:

• Non-competitively
  Meaning you purchase the T-bill at the % set by the Treasury, a guaranteed purchase; or
  


• Competitively
  Meaning that you state the interest rate you want, and, after all non-competitive bids are satisfied, the Treasury goes down the list of competitive bids starting with the lowest % offered - you may or may not be selected to participate.

T-bills with 4-week terms are auctioned every Tuesday, and 13- and 26-week (3-month and 6-month) T-bills are auctioned on Mondays. The account set-up process was immediate and painless, and for successful purchases, $ is taken withdrawn from your linked bank account on the day of settlement, which is two days after the auction. I plan to buy another in 2 weeks, but I'm waiting expectantly to see how expeditiously the Treasury pays out matured T-bills...keep you posted!

Update (3/2007): I've been remiss about my PFblog-reading lately; turns out TSFD has a nifty T-bill guide. Two cheers for Google Reader!

Update #2 (4/2007): My first 4-week T-bill matured yesterday. (Thursdays, always Thursdays!) I'm happy to report that the $ was deposited into my account right away, in time for next Tuesday's auction. Must learn to automate!