The average interest rate the Treasury paid on all interest bearing federal debt reached 3.531% on September 30, 2026, the highest month end reading since April 2009. Treasury’s average interest rates series, published through the Fiscal Data portal, put the figure 16.8 basis points above the 3.363% recorded at the close of fiscal 2025 and 21.5 basis points above the 3.316% low set in January. September closed fiscal 2026 and marked the eighth consecutive monthly increase in the blended rate.
The reading matters because of the numbers sitting next to it. In the first full week of October, Treasury sold new debt at far higher yields than the 3.531% it books on the existing stock. A 3-year note cleared 4.932% on October 6, a 10-year note stopped at 5.300% on October 7, and a 30-year bond cleared 5.618% on October 8. That bond sits 208.7 basis points above the average rate the government now pays, so every security refinanced at current levels pulls the blended cost higher.
Total public debt outstanding stood at $40.284 trillion on October 7, up $112.2 billion from the fiscal year end figure of $40.172 trillion. The gap between booked and market rates is the single largest driver of future federal interest on the national debt, and the short term policy rate that sets the current prime rate feeds the same machinery.
Key Takeaways
- The average rate on all interest bearing federal debt hit 3.531% on September 30, the highest since April 2009.
- September was the eighth straight monthly increase, up 21.5 basis points from the January low of 3.316%.
- Treasury’s 30-year bond cleared 5.618% on October 8, or 208.7 basis points above the average rate now booked.
- Bills and floating rate notes total $7.826 trillion and reprice inside a year at current short term yields.
- Prime stands at 7.00% and the FOMC next meets October 27 and 28.
Table of Contents
What the Fiscal Year End Reading Shows
Treasury reports one blended rate across every interest bearing obligation it owes, from 4-week bills to 30-year bonds to non marketable securities held in federal trust funds. That rate bottomed at 3.316% in January 2026 and has risen in each of the eight months since: 3.320% in February, 3.327% in March, 3.340% in April, 3.353% in May, 3.409% in June, 3.447% in July, 3.490% in August and 3.531% in September. The last time the series printed at or above 3.531% was April 2009, when it read 3.587% on the way down from its pre crisis peak.
The components show where the pressure starts. Treasury bills averaged 3.870% in September, the highest of any marketable category and a direct reflection of the 3.75% to 4.00% federal funds target range. Notes averaged 3.383% and bonds 3.466%, both held down by securities issued during the low rate decade that have not yet matured. Floating rate notes averaged 4.141% because they reset against bill auction results, and inflation protected securities averaged 1.149% on their coupon alone. Across all marketable debt the average was 3.518%.
The Gap Between Booked Debt and New Debt
Three coupon auctions in the first week of October show what replacement debt costs. Treasury sold $58 billion of 3-year notes at 4.932% on October 6 with a bid to cover ratio of 2.62. It sold $39 billion of 10-year notes at 5.300% on October 7 with a bid to cover of 2.77. It sold $22 billion of 30-year bonds at 5.618% on October 8 with a bid to cover of 2.54. Against the 3.531% average, those yields run 140.1, 176.9 and 208.7 basis points higher. Demand was not the constraint. Indirect bidders, the category capturing most foreign and fund buying, took $15.87 billion of the 30-year issue, leaving primary dealers only $1.49 billion of the $21.94 billion awarded competitively.
Secondary market yields confirm the level. The 10-year Treasury closed at 5.28% on October 7 and the 30-year at 5.67%, with the 2-year at 4.77%, according to the Federal Reserve’s daily series. The spread between 10-year and 2-year yields stood at 47 basis points on October 8, so the curve is upward sloping rather than inverted, and longer maturities carry the higher cost. Readers tracking the shape can follow it on the Treasury yield curve page.
How Much Debt Reprices, and How Fast
The Monthly Statement of the Public Debt puts total marketable debt at $31.835 trillion on September 30, inside a total public debt of $40.172 trillion. Bills account for $7.118 trillion of the marketable total, or 22.36%, and every one of them matures within 52 weeks. Floating rate notes add $707.98 billion that resets quarterly against bill results. Together that is $7.826 trillion repricing inside a year, and the bills already on the books average 3.870% against October auction results of 3.980% at 4 and 8 weeks, 4.050% at 13 weeks, 4.105% at 17 weeks and 4.165% at 26 weeks.
The slower repricing sits in the coupon stock. Notes total $16.282 trillion and average 3.383%, nearly two full percentage points under the 5.300% the 10-year just cleared. Bonds total $5.551 trillion and average 3.466% against a 30-year auction at 5.618%. Those securities roll off over years rather than months, which is why the blended rate has climbed four or five basis points a month rather than jumping. It also means the climb continues even if the Federal Reserve stops raising rates, because the arithmetic is driven by maturities rather than by the next policy decision. The Congressional Budget Office attributes much of its projected rise in deficits to these net interest costs. Current levels sit on the current national debt page.
What It Changes for Household Borrowing
The same federal funds target range that lifted Treasury bill costs to 3.870% sets the prime rate that banks quote on consumer credit. The Federal Reserve’s H.15 release dated October 8 shows the bank prime loan rate at 7.00% and the effective federal funds rate at 3.88% as of October 7. Prime tracks the target range, so the quarter point increase the FOMC approved 12 to 0 on September 16 reached variable rate credit cards, home equity lines and many small business loans within a billing cycle.
Fixed rate borrowing follows the long end instead. With the 10-year at 5.28% and the 30-year at 5.67%, mortgage pricing takes its cue from the same auctions that reprice federal debt, which is why current mortgage rates have stayed elevated through the year. Savers sit on the other side: bill yields above 4% at 13 and 26 weeks keep deposit competition alive, and the best high yield savings accounts and CD rates continue to price off short term Treasury yields. The next scheduled decision point is the October 27 and 28 meeting listed on the Fed meeting schedule.
Pro Tip
If you hold cash in a bank account paying under 1%, compare it against the 26-week Treasury bill that cleared 4.165% on October 5. The federal government is paying more than three percentage points above a low yield savings account for the same six month commitment, and that spread is available to retail buyers at auction or through a brokerage. Check the maturity date against money you may actually need before you lock it up.
Frequently Asked Questions
What is the average interest rate on the federal debt right now?
The average interest rate on all interest bearing federal debt was 3.531% on September 30, 2026, according to Treasury’s average interest rates data. That is the highest month end figure since April 2009 and up from 3.363% a year earlier. The figure blends every obligation Treasury owes, from 4-week bills to 30-year bonds. It has climbed in each of the eight months since January, when it bottomed at 3.316%. Treasury updates the series once a month, and the September reading closed fiscal 2026.
How much interest is paid annually on the national debt?
Treasury reports interest expense monthly rather than as a single headline annual number, and the total depends on whether you count gross interest on all debt or net interest after intragovernmental offsets. The direction is not ambiguous. With $40.284 trillion outstanding as of October 7 and the average rate rising to 3.531%, the cost of carrying the debt increases every month that maturing low coupon securities are replaced at current yields. You can follow the running figures on the interest on the national debt tracker.
Why is the average rate lower than what Treasury pays at auction today?
Because most of the debt was issued before rates rose. Notes outstanding total $16.282 trillion and average 3.383%, while the 10-year note sold on October 7 cleared 5.300%. A security issued in 2020 at a 1% coupon keeps paying 1% until it matures, no matter what the market does. The average only moves when old securities roll off and new ones replace them, which is why it has risen about four basis points a month through the summer rather than jumping to market levels.
Who owns the $40 trillion national debt?
Treasury splits the $40.284 trillion outstanding on October 7 into two buckets. Debt held by the public accounted for $32.439 trillion and covers domestic and foreign investors, mutual funds, pension funds, banks, insurers and the Federal Reserve. Intragovernmental holdings accounted for the remaining $7.845 trillion and represent money federal trust funds, including Social Security, have lent to the general fund. Only the publicly held share is sold at auction and repriced at market yields, so the $32.439 trillion figure rather than the headline total is what drives Treasury’s interest bill.
Does the average rate on the federal debt affect my mortgage or credit card?
Not directly, but both respond to the same inputs. Your credit card APR is tied to the prime rate, which sits at 7.00% and tracks the federal funds target range of 3.75% to 4.00%. That range is also what drives Treasury bill yields to 3.870% and pushes the blended federal rate higher. Mortgage pricing follows the 10-year Treasury, which closed at 5.28% on October 7. So the federal cost and your cost move together because they share a yield curve, not because one causes the other.
When will the average rate on the debt stop rising?
It stops when new issuance prices at or below the blended average, which would require market yields to fall under roughly 3.5% across the curve. Nothing in current pricing points that way: the 3-year note cleared 4.932% on October 6 and the 30-year bond 5.618% on October 8. Even a pause in Federal Reserve increases would not halt the climb, because $7.826 trillion of bills and floating rate notes reprices inside twelve months regardless of what the FOMC decides.
Watching the October Meeting and the Next Refunding
The FOMC meets October 27 and 28, and September minutes released October 7 showed most participants expecting another increase to be appropriate by year end. A quarter point move would take prime to 7.25% and lift bill yields again, which feeds the blended federal rate within weeks. The October reading of Treasury’s average interest rates series lands in early November. Track the policy path on the Fed rate forecast page, the holder breakdown at who owns the US debt, and the prior reading in this series at 3.41% in July.
References
- U.S. Department of the Treasury, Fiscal Data, Average Interest Rates on U.S. Treasury Securities, September 30, 2026.
- U.S. Department of the Treasury, Fiscal Data, Debt to the Penny, October 7, 2026.
- U.S. Department of the Treasury, Fiscal Data, Monthly Statement of the Public Debt, September 30, 2026.
- TreasuryDirect, Auction Query, CUSIPs 912810UW6, 91282CRF0 and 91282CRQ6.
- Board of Governors of the Federal Reserve System, H.15 Selected Interest Rates, October 8, 2026.
- Board of Governors of the Federal Reserve System, FOMC statement, September 16, 2026, 12 to 0 vote.
- Board of Governors of the Federal Reserve System, FOMC Meeting Calendars, October 27 and 28, 2026.
- Federal Reserve Bank of St. Louis, FRED series DGS30, DGS10, DGS2 and T10Y2Y, through October 8, 2026.
- Congressional Budget Office, The Budget and Economic Outlook, on net interest costs.
