What is a T-bill ladder?

A set of Treasury bills with different maturity dates so portions of principal come due over time instead of all at once.

Why not one long bill?

A single maturity forces you to reinvest everything on one auction day. A ladder spreads reinvestment risk and creates recurring cash.

Four to six is common for personal cash (for example 4/8/13/26/52-week style spacing). Match rung dates to rent, tax, or payroll needs.

Does a ladder lock the rate forever?

No. Only each rung is locked until it matures. When it rolls, you take the new auction (or secondary) rate.

Is this investment advice?

No. It is a cash-management structure explanation for educational use.

How a T-bill ladder works

A ladder is a calendar of maturities, not a product you buy once. You split cash across several Treasury bills so money returns in waves.

The problem a ladder solves

Park everything in a checking account and you earn little. Park everything in one 52-week bill and you cannot touch principal without selling early. A ladder sits between those extremes: most cash still earns bill yields, but something is always approaching maturity.

Cash managers use the same idea with commercial paper and CDs. The Treasury version adds a state-tax feature on the interest that bank deposits usually lack — covered in our state-tax guide.

Building equal rungs

Equal-dollar rungs are the default design. Divide principal by the number of rungs and buy roughly the same face amount in each tenor you care about. Example: $50,000 across five rungs → about $10,000 face each.

Unequal rungs make sense when the calendar is lumpy — a larger rung before April estimated taxes, a smaller one after a known bonus. The structure is flexible; the discipline is writing the calendar down.

Pick tenors you can actually buy (4, 8, 13, 17, 26, 52 weeks are common bill tenors).
Align settlement cash before auction deadlines.
Decide in advance whether maturing principal auto-rolls or sits in cash.

Reinvestment risk is intentional

When rates fall, maturing rungs reinvest lower. When rates rise, you reinvest sooner than a single long bill would allow. That trade-off is the point of the ladder: you accept path risk to keep liquidity events on a schedule.

Compare this to a money market fund, which marks yield daily and usually allows faster withdrawals. Use the ladder when you can name the dates you need cash; use a fund when the date is unknown.

How RungRate implements the idea

The ladder builder splits principal and estimates interest with a disclosed day-count formula. It does not place trades. Pair it with the after-tax comparator so a bank CD ladder is not compared to bills on pre-tax APY alone.

On this wire

General information, not personalized advice.