what were the interest rates they were paying/why would they pay it off?

are they getting 3.5% on all of their "cash on hand" with recent rise in interest rates?

6-month US treasury yields are at 4.78%

There has to be a reason Apple has any cash on hand whatsoever instead of parking a lot there? Unless they look at that as a cash-equivalent... which I am guessing they don't?

Cash on hand is marked as "Cash And Short Term Investments" in the balance sheet and includes US treasuries which are very liquid and basically as good as cash.