4-Week T-Bill Rate Calculator
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Purchase Price
–
Interest Earned (Net Profit)
–
Investment Rate (BEY)
–
Maturity Duration
28 Days
Understanding 4-Week Treasury Bill Rates
The 4-Week Treasury Bill (T-Bill) is one of the shortest-term debt securities issued by the U.S. government. Because it is backed by the full faith and credit of the United States, it is considered one of the safest investments available. Unlike traditional bonds that pay regular interest coupons, T-Bills are zero-coupon securities sold at a discount to their face value.
Key Concept: You do not receive interest payments during the 4 weeks. Instead, you buy the bill for less than its face value (e.g., $996) and receive the full face value (e.g., $1,000) when it matures 28 days later. The difference is your profit.
How the 4-Week T-Bill Calculation Works
Calculating the return on a T-Bill involves two specific metrics: the Discount Rate and the Investment Rate (or Bond Equivalent Yield). The math differs slightly from a standard savings account due to day-count conventions used in money markets.
- Face Value: The amount the government pays you at maturity.
- Discount Rate: This is the annualized percentage deducted from the face value to determine the purchase price. It utilizes a 360-day year convention.
- Investment Rate (Bond Equivalent Yield – BEY): This is the actual annualized return on your invested cash, comparable to an APY on a bank account. It typically utilizes a 365-day year convention.
The Formulas
To determine how much you actually pay and earn, our calculator uses the standard Treasury formulas:
1. Discount Amount = Face Value × (Discount Rate / 100) × (28 / 360)
2. Purchase Price = Face Value – Discount Amount
3. Bond Equivalent Yield = (Discount Amount / Purchase Price) × (365 / 28) × 100
Why Invest in 4-Week T-Bills?
Investors often flock to 4-week T-Bills during periods of rising interest rates or market uncertainty. The short 28-day duration means your money is not locked up for long, allowing you to quickly reinvest at potentially higher rates if the Federal Reserve raises rates. Additionally, the interest income generated from T-Bills is exempt from state and local income taxes, which can effectively boost the after-tax yield for investors in high-tax states.
Interpreting Your Results
When using the calculator above, focus on the Investment Rate (BEY) to compare the T-Bill against other investments like High-Yield Savings Accounts (HYSA) or CDs. While the "Discount Rate" is used to price the bond, the BEY represents your true annualized return on capital.
function calculateTBill() {
// 1. Get input values
var faceValueInput = document.getElementById("faceValue").value;
var discountRateInput = document.getElementById("discountRate").value;
// 2. Validate inputs
if (faceValueInput === "" || discountRateInput === "") {
alert("Please enter both the Face Value and the Discount Rate.");
return;
}
var faceValue = parseFloat(faceValueInput);
var discountRate = parseFloat(discountRateInput);
if (isNaN(faceValue) || isNaN(discountRate)) {
alert("Please enter valid numbers.");
return;
}
if (faceValue <= 0 || discountRate 0) {
investmentRate = (discountAmount / purchasePrice) * (daysInYearYield / daysToMaturity) * 100;
}
// 7. Format Output
// Format Currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2,
maximumFractionDigits: 2
});
// 8. Update HTML
document.getElementById("purchasePriceDisplay").innerHTML = formatter.format(purchasePrice);
document.getElementById("interestEarnedDisplay").innerHTML = formatter.format(discountAmount);
document.getElementById("beyDisplay").innerHTML = investmentRate.toFixed(3) + "%";
}