What to do with the interest from rolling T-bills

My monthly rolling of T-bills occurred on Thursday. The face value of the maturing T-bills was credited to my linked bank checking account by the TreasuryDirect online system and then the discounted purchase price of the new T-bills was debited from the same account, with the difference being the interest that I earned. Now, the question is what to do with the interest since my T-bill purchase is far too small to buy additional T-bills in units of $1,000 with the monthly interest. I chose to put the interest in my PayPal account which automatically puts the cash to work in a money market mutual fund, regardless of how small the amount is.

T-bills issued on Thursday will pay a 5.19% annualized investment rate. The PayPal money market fund is payying a 5.04% 7-day yield, which is reasonably close to what I get on the T-bills.

I actually deposited a fair amount more cash in my PayPal account beyond the T-bill interest, all in the name of increasing my savings and rainy-day fund. In another month or two I will have enough money saved there to increase my T-bill holdings and earn the higher T-bill yield.

As I accumulate enough cash to buy more T-bills, I intend to buy them for the other three weeks of the 28-day cycle. That will assure me that each week cash will become available if I need it.

-- Jack Krupansky