Treasury Bonds Key Terms

Key terms to help amp up your financial portfolio with a low-risk investment

By Trisha Schulz

Treasury bonds are popular because they have little chance of default since they are backed by the government. However, lower risk nets lower yields. But numerous advantages exist. Some bond holders especially enjoy not having to pay local or state taxes on their bond returns or interest payments. Interested in making a Treasury bond purchase? You can either buy bonds directly from the government through auctions or work with a broker. To get you up to speed on Treasury bills, consider the following key terms.

Treasury securities

Bonds, bills and notes make up the broader category of Treasury securities, which are securities sold by the government to pay for federal debt.
Try: Find out more about how to purchase Treasury securities through the U.S. Department of the Treasury, Bureau of the Public Debt.

Treasury bonds

The most recognized kind of government security, Treasury bonds are similar to Treasury notes and Treasury bills, but the length of maturity is set at 30 years. Those holding bonds are paid semi-annual interest payments, and bonds are issued in $1,000 values.
Try: Find out more about the different kinds of savings bonds, a variation of Treasury bonds, through the U.S. Securities and Exchange Commission.

Treasury bills

Treasury bills, informally known as T-bills, are an investment tool issued by the government in which interest is earned from the price you paid for it until it is cashed in past the maturity date. Considered the safest investment, Treasury bills are a short-term investment with maturity in one year or less.
Try: Check out an example of how Treasury bills work at Investopedia.

Treasury notes

Treasury notes, or T-notes, are similar to bills, but they have a longer maturation date, usually two, three, five or 10 years. Note holders are paid semi-annual interest payments, and notes are usually issued in $1,000 values.
Try: Check out a chart comparing Treasury notes, Treasury bills and Treasury bonds, as well as other information through the Securities Industry and Financial Markets Association.

Maturity

Maturity refers to the date when payment is due. Treasury bond options each have a maturation date at which the bond can be redeemed at full value.
Try: Singing River Federal Credit Union shows examples of maturity and how that affects the value of savings bonds.

Coupon payment

A coupon payment refers to the semi-annual interest payment a bond holder receives. The payment will vary, as it depends on the values of your bonds and the current interest rate.
Try: Check out the definition and example of coupon payment offered by Military Money.