How treasury bills roll over
If I choose to automatically roll over my treasury bill at its maturity, do I receive the accrued interest into my bank account? Then, does the principle roll over while I receive the interest? Or, does the principle and the interest roll over together into the next term which, I’m guessing will automatically be the same term as the original that I chose with the exception that the most recent interest rate will apply?
Terry Says
You may have noticed that when you first purchased your Treasury bill, the entire principal DID NOT come out of your bank account. For example, if you purchased a $10,000 bill, they took out only about $9750 (the difference being the interest on the 6-months of the maturity) which is paid UP FRONT.
So, at maturity, you will have exactly $10,000 to roll over. And at that point, yes, you’ll get whatever is the current auction rate that week. And the interest amount will immediately drop back into your bank account.
Read this: https://www.terrysavage.com/t-bills-beat-cds-2/
