So... I bought a T-Bill to try it out. $1k from Treasury Direct for 4 weeks. I'm trying this out because my wife and I have saved our next school-year's expenses and I'd rather not have $10k just sitting in my checking account. Moved most of it to an Ally Savings account, but thought I'd try T-Bills too.
Here's the deal....
I bought a 4-week bill, and the price ended up being $996.69 $998.69 (My dyslexia got in there again... :/). And the par amount is $1,000.00. That's a lot more discount than I expected! I read ~1-2% for T-Bills and thought that was APY. But this is 1.31% in 4 weeks!! That compounds to like 15% per year!
What am I missing? Instinctively I know I couldn't make 15%/yr off the treasury. Where has my thinking gone wrong?
EDIT: 1.31/998.69 = 0.00131 which is 0.131% not 1.31%. Count your zeros...