Buy U.S. Treasury bills at auction through Vanguard and line up your cash for a home purchase or another big date.
Written for first-timers who already have a Vanguard brokerage account. Follow the eight steps, then build a simple ladder for money you’ll need on a known date.
Why T-bills for money you’ll need soon
A Treasury bill is a short-term loan to the U.S. government. You buy it for less than its face value, and on a fixed date the Treasury pays you the full amount. The difference is your interest. Bills last from 4 weeks to 1 year.
For money with a deadline, like a down payment due in six months, T-bills do two things a savings account can’t: they lock in today’s rate until the day you need the cash, and the interest is exempt from state income tax.
That’s roughly what a $150,000 down payment earns in the four-rung ladder below, at about 3.9%, before your closing in six months. Checking at 0.01% earns about $6 on the same money.
T-bills, VUSXX, or checking?
| Checking | VUSXX | T-bills at auction | |
|---|---|---|---|
| Yield (October 2026) | about 0.01% | about 3.8% | about 3.9%–4.2%, set at each auction |
| Rate locked? | no | no, moves with the Fed | yes, until maturity |
| Fees | none | 0.07% a year, netted from the yield | $0 at auction |
| State income tax | taxable | mostly exempt | fully exempt |
| Getting your money | immediate | any business day | at maturity, or sell early at market price |
| Best for | day-to-day bills | emergency fund, flexible cash | money needed on a known date |
Many people use both: VUSXX for the emergency fund and anything with an uncertain date, and T-bills for a dated goal like a home closing.
The whole process at a glance
1. Prepare
Use your brokerage account, have cash ready, and pick terms from your date.
2. Buy
Place a noncompetitive order at auction and see the rate you locked in.
3. Collect
Receive the full face value and report the interest the right way.
Where your money actually goes
face value
at maturity
Your timeline for one bill
- ThursdayTreasury announces the next 13- and 26-week auctions. Place your order before Vanguard’s cutoff.
- MondayThe auction sets the price and yield for everyone.
- ThursdayThe bill is issued and paid for from your settlement fund.
- Maturity dateThe full face value lands back in your settlement fund.
The 17-week bill auctions on Wednesdays, and other terms follow their own weekly schedules. Vanguard’s trade screen lists the upcoming dates.
The eight steps
Use your Vanguard brokerage account
- Log in and open the same individual brokerage account you use for VUSXX
- Don’t have one yet? Follow steps 1–4 of our VUSXX guide first
- T-bills can’t go in the settlement fund or in VUSXX itself; they sit in the brokerage account as their own holding
Why this matters
Holding T-bills, VUSXX, and your settlement fund in one account means maturing bills can flow straight into VUSXX or the next bill without a bank transfer.
Put the cash in your settlement fund
- Sell enough VUSXX to cover your order, or transfer money from your bank
- Wait until the cash shows as available in the settlement fund (VMFXX)
- Leave earnest money and closing costs in VUSXX, where you can reach them any day
Why this matters
Your order is paid from the settlement fund on the day the bill is issued, so the cash has to be there and available before you place the order.
Work backward from the date you need the money
- Write down the date you need the cash, like a home closing
- Pick the term that matures one to two weeks before that date
- For a date that might move, split the money across several maturities (see the ladder below)
Why this matters
A bill only pays its full value at maturity. Matching the maturity to your date, with a cushion, means you never have to sell early.
Bill terms sold at auction
| Term | About | Good for |
|---|---|---|
| 4-week | 1 month | Cash you’ll need next month, or a short gap before a longer bill |
| 6-week | 1½ months | Bridging to a date that falls between monthly maturities |
| 8-week | 2 months | Near-term bills, estimated tax payments |
| 13-week | 3 months | The most common building block of a ladder |
| 17-week | 4 months | The month-4 rung of a ladder |
| 26-week | 6 months | Money for a date about half a year out |
| 52-week | 1 year | Locking a rate for a full year |
There’s no 5- or 7-week bill. If your date falls in between, use the next shorter term and keep the gap in VUSXX.
Find the upcoming auction
- Go to Buy & Sell, then choose bonds and CDs
- Select Treasuries, then New issues or Auction
- Pick the term you chose and note the auction date, the issue date, and the order cutoff
Why this matters
New-issue bills at auction have no commission and no markup. Everyone pays the same price set by the auction. Bills bought on the secondary market usually carry a small built-in spread.
Enter the amount and place your order
- Enter the face value you want, such as $38,000, in the increments Vanguard allows (often $1,000)
- Pay from your settlement fund
- Place a noncompetitive order, which accepts the rate the auction sets
- Check that the order is in before Vanguard’s cutoff, then submit
Why this matters
A noncompetitive bid guarantees you get the bill. You don’t need to guess a rate; you get the same yield as large institutions.
Preview order
Check your price after the auction
- After the auction, Vanguard shows the final price and yield
- On the issue date, the price is charged to your settlement fund
- The bill appears in Balances & holdings at its face value and maturity date
Why this matters
This is where you see what you actually locked in. Unlike VUSXX, that rate won’t change if the Federal Reserve cuts rates before your bill matures.
How discount pricing works
T-bills don’t pay interest along the way. You buy below face value and receive the full face value at maturity. The example uses a 26-week bill at about a 3.9% yield.
Collect at maturity
- The full face value lands in your settlement fund on the maturity date
- Move it into VUSXX if you don’t need it yet, or buy the next bill
- Withdraw to your bank once the closing or payment date is close
Why this matters
Matured cash sitting in the settlement fund still earns money market interest, but moving it to VUSXX gets you the state tax break back. Plan the next step for each bill when you buy it.
Need the money before the bill matures?
You can sell a bill early in your Vanguard account on the secondary market. You’ll get the current market price, which can be a little more or less than what the bill is worth on paper, and the money arrives in a day or two. That flexibility is the main reason to buy through a brokerage instead of TreasuryDirect, where you’d have to transfer the bill to a brokerage first.
Can I auto-reinvest a T-bill?
Vanguard doesn’t appear to offer automatic rollover for T-bills. Maturing bills pay into your settlement fund, and you place the next order yourself. Some other brokerages, like Fidelity and Schwab, do offer auto-roll.
To roll manually at Vanguard, bid on the next auction before your current bill matures. The 13- and 26-week bills mature and issue on the same weekday, so money from a bill maturing Thursday can pay for a new bill bought at that Monday’s auction. Vanguard may warn that the cash isn’t there yet; the order can still go through.
If you’d rather not roll by hand every month, VUSXX does the rolling for you and you can reach the money any business day.
Handle the taxes
- Vanguard reports T-bill interest on Form 1099-INT
- Report it on your federal return
- Subtract it on your state return; Treasury interest is exempt from state and local income tax
Why this matters
The state subtraction is easy to miss, especially when software lumps it in with bank interest. Make sure it’s on your return.
When the tax hits
The interest counts in the year the bill matures, not the year you buy it. A 26-week bill bought in October that matures in April is taxed on next year’s return. It’s fully taxable federally and exempt from state and local income tax.
Example: a ladder for a home closing
Say your $150,000 down payment is due in about six months, but the exact closing date could move by a few weeks. Instead of one large bill, split it into four rungs of about $37,500 each (rounded to the order increments Vanguard allows) that mature a month apart as the closing approaches.
| Rung | What to buy | When it matures | Interest at about 3.9% |
|---|---|---|---|
| 1 | 13-week bill, now | Month 3 | about $365 |
| 2 | 17-week bill, now | Month 4 | about $475 |
| 3 | 17-week bill, bought one month from now (keep the cash in VUSXX until then) | Month 5 | about $475, plus a month of VUSXX interest |
| 4 | 26-week bill, now | Month 6 | about $730 |
| Total | about $2,050 |
As each rung matures, move the cash into VUSXX. By month six, the whole down payment is available any business day, and you’ve collected Treasury rates the entire time. If the closing moves earlier, the money from the early rungs is already free. If it moves later, roll a rung into a 4- or 6-week bill.
Is it safe? T-bills are backed by the full faith and credit of the U.S. government, and if you hold one to maturity you get exactly the face value. The only risk is selling early, when the market price can be slightly lower than what you’d receive at maturity.
Vanguard or TreasuryDirect?
Same auction, same rate, $0 commission. You can sell early, matured money lands next to your VUSXX, and all your accounts are in one place.
Also no fee, directly from the government. But you can’t sell before maturity without transferring the bill to a brokerage, and matured cash goes back to your bank.
Before you finish: quick checklist
- Cash available in the settlement fund
- Maturity one to two weeks before your date
- Bought at auction, not secondary
- Noncompetitive order placed before cutoff
- Final price and yield checked
- Bill showing in Balances & holdings
- Plan for each bill’s maturity cash (no auto-roll)
- State tax subtraction on your return
Planning a home purchase or big payment?
We’ll map out your T-bill ladder against your closing date, size your emergency fund, and make sure the Treasury interest is reported correctly on your return.
Or call 516-261-2171
Sources
- TreasuryDirect: Treasury bills, terms, and auctions
- Vanguard: Money market funds, minimums and expense ratios
This guide is for general educational purposes and is not individual investment, tax, or legal advice. Yields shown are approximate as of October 2026 and change with every auction. Interest examples are hypothetical and rounded. Vanguard’s screens, order cutoffs, and minimums change from time to time.