T bill yield calculator: convert T-bill discount price to bank discount, coupon equivalent, and investment yield. Free, no signup, runs in your browser.
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$975 buy, $1,000 at maturity
What this means for your numbers: On the worked example, bond-equivalent yield (5.136%) beats the discount quote (4.945%) by 19 bps, a pure convention gap. On $100,000, that misread is $190/year.
Illustrative breakdown using the worked example above. The calculator computes your own numbers with the same formula.
Worked example: a 90-day bill bought at a discount
Say you buy a $1,000 face value bill for $985.60 with 90 days to maturity. The discount is $1,000.00 minus $985.60, which is $14.40 of profit. The calculator plugs this into the discount yield formula: (14.40 / 1,000) x (360 / 90) x 100 = 0.0144 x 4 x 100 = 5.76% discount yield.
Notice the two parts of that formula do different jobs. Dividing by face value measures the discount as a fraction of what you get back at maturity, and the 360/days factor scales it to a yearly rate using the banker's 360-day convention. The simple holding return is smaller: $14.40 earned on $985.60 invested is a 1.46% return over 90 days.
That 1.46% is not directly comparable to a CD or savings APY. Compounded annually, 1.461% over 90 days works out to about 6.06% effective annual yield, and the market-standard coupon equivalent comes to about 5.93%. All three numbers describe the same bill, so check which basis a quoted rate uses before comparing investments.
Where the discount yield number misleads
Discount yield systematically overstates your true return for two reasons baked into the formula. It divides by face value when your actual cash outlay is the lower purchase price, and it uses a 360-day year while your money is actually tied up on a 365-day calendar. On the worked example above, 5.76% discount yield versus 6.06% effective annual yield is roughly a 0.30 point gap, and the gap widens with longer maturities.
The calculator also assumes you hold to maturity with no transaction costs. Buying through a broker typically costs nothing on the primary auction, but secondary-market purchases can carry markups of a few tenths of a percent, and selling early means accepting whatever price the market offers that day rather than the tidy face-value payoff. A 52-week bill ($1,000 face, 365 days) is the formula's hard upper boundary: the day count simply refuses inputs beyond 365.
Finally, prices move with rates. A bill bought at $985.60 yielding 5.76% only stays at that yield if market rates hold; if rates jump 50 basis points the week after you buy, the resale value of your bill drops even though its maturity payoff never changes. The number on this page is a purchase-date snapshot, not a guarantee about the holding period.
