You can buy corporate bonds through brokerages, bond platforms, and your bank's investment arm

Corporate bonds are sold through several channels, and which one you use depends on the bond type, how much you want to invest, and whether you want professional guidance. The most common routes are full-service brokerages (like Fidelity, Charles Schwab, or E*TRADE), discount brokerages (like Interactive Brokers), bond-specific platforms (like BondEdge or Fidelity's bond desk), and direct purchases from the issuing company or a transfer agent. Each has different minimums, fees, and the range of bonds available to you.

Most individual investors start with a brokerage they already use for stocks or mutual funds, since you can buy bonds in the same account without opening something new. The trade-off is that brokerages typically charge a markup on bond purchases — a hidden fee built into the price — rather than showing you a commission upfront. Bond platforms and dedicated bond desks often show you the markup explicitly, which lets you shop around and see what you are actually paying.

Key Takeaways

  • Full-service brokerages like Fidelity and Schwab let you buy corporate bonds in an existing account, but they add a markup to the price that varies by bond and is not always shown separately.
  • Bond-specific platforms and your brokerage's bond desk often display the markup as a separate line item, making it easier to compare costs across different bonds.
  • Minimum investments range from $1,000 to $5,000 per bond at most brokerages, though some platforms allow smaller amounts or fractional shares.
  • Secondary market bonds (already issued and trading between investors) are more liquid and easier to sell than new issues, but prices fluctuate with interest rates.
  • Direct purchases from the issuer or through a transfer agent are possible but rare for individual investors and usually require larger minimums.

Full-service brokerages and what they charge

Fidelity, Charles Schwab, E*TRADE, and Merrill Edge all let you buy corporate bonds through their platforms. You log in to your brokerage account, search for a specific bond by ticker or issuer name, and place an order just like you would for a stock. The minimum is typically $1,000 per bond, and you can hold the bonds in a taxable account, IRA, or other account type you already have open.

The cost is a markup added to the bond's price. If a bond is trading at $1,020, the brokerage might show you $1,025 — the $5 difference is their fee. This markup is not always listed as a separate line; you have to compare the price you see to the actual market price elsewhere to know what you are paying. Markups vary widely depending on the bond's liquidity (how easily it trades), the issuer, and the brokerage. A liquid bond from a large company might have a $2 to $5 markup per $1,000 bond; a less common bond might be $10 or more.

The advantage is convenience: if you already have an account, you can buy bonds without paperwork or a new login. The disadvantage is that you cannot always see the markup before you commit, and customer service at a general brokerage may not be as deep on bond questions as it would be at a dedicated bond desk.

Bond-specific platforms and bond desks

Some brokerages operate a separate bond desk or offer a bond-focused platform where the markup is shown as a separate charge. Fidelity's bond desk, for example, lets you call or use their online tool to see the markup before you buy. BondEdge, Vanguard's bond platform, and Interactive Brokers all display costs more transparently than a typical stock-and-bond brokerage does.

These platforms often have lower markups because they cater to investors who are price-sensitive and willing to shop around. You may also get access to a wider range of bonds — including less common corporate issues — because these platforms source from multiple dealers. The trade-off is that minimums can be higher (sometimes $5,000 per bond), and the interface may be less polished than a mainstream brokerage.

If you are buying more than a few bonds or want to compare prices across multiple issues, a bond desk or dedicated platform is worth the time to set up. If you are buying one or two bonds and convenience matters more than saving $10 to $20 per purchase, a full-service brokerage is fine.

New issue bonds versus secondary market bonds

Corporate bonds are sold in two ways: as new issues (freshly issued by the company) and on the secondary market (already issued and trading between investors). Most individual investors buy secondary market bonds through a brokerage because new issues often require larger minimums and are sold through underwriters or financial advisors.

New issues sometimes have no markup or a lower markup because the underwriter is compensated by the issuer, not by you. However, you have less choice — you buy what is being offered that day — and you cannot sell easily until the bond has traded for a while. Secondary market bonds are more liquid; you can sell anytime during market hours, though the price will have moved up or down based on interest rates and the company's credit quality.

For most individual investors, secondary market bonds are the practical choice. You can search by issuer, maturity date, and yield, and you can sell if your circumstances change. The markup you pay is the cost of that liquidity and access.

Direct purchases and transfer agents

Some companies allow you to buy their bonds directly through a transfer agent or investor relations department, bypassing a brokerage entirely. This is rare and usually only available for large, well-known issuers. The advantage is no markup and sometimes a lower minimum. The disadvantage is that you have to contact the company directly, the process is slow, and selling requires going through a broker anyway (which means you will pay a markup when you exit).

For most individual investors, direct purchase is not practical. It makes sense only if you plan to hold the bond to maturity and want to avoid the markup on the way in. Even then, you will likely pay more to sell than you saved by buying direct.

Comparing costs across platforms

To find the best price for a specific bond, you need to check the same bond on multiple platforms. Search for the bond by its CUSIP (a nine-character identifier) or issuer name and maturity date. Write down the price and yield on each platform, then calculate the markup by comparing to the mid-market price (the average of bid and ask prices from a market data source).

This is tedious for one or two bonds, but if you are building a bond ladder or buying several issues, it is worth 20 minutes of comparison shopping. A difference of $10 to $20 per bond adds up quickly across a portfolio. Some investors use a spreadsheet to track prices across brokerages and buy from whichever platform is cheapest for each bond.

Account types and tax considerations

You can buy corporate bonds in a taxable brokerage account, an IRA, a 401(k) with a self-directed brokerage option, or a trust account. The account type does not change where you buy — most brokerages let you buy bonds in any account type you hold — but it does affect how the interest and any capital gains are taxed.

In a taxable account, you owe federal income tax on the interest (called coupon payments) every year, even if you do not sell the bond. In a traditional IRA or 401(k), the interest is tax-deferred until you withdraw. In a Roth IRA, the interest and any gains are tax-free if you follow the withdrawal rules. This is a reason many investors hold bonds in retirement accounts and stocks in taxable accounts, though the right strategy depends on your overall tax situation.

Frequently Asked Questions

What is the minimum amount I need to invest in corporate bonds?

Most brokerages require $1,000 per bond as a minimum. Some platforms allow smaller amounts or fractional shares, and a few bond desks have $5,000 minimums. Check your specific brokerage's rules before you open an account.

Can I sell a corporate bond before it matures?

Yes. You can sell any bond you own on the secondary market during trading hours. The price will have moved up or down based on interest rates and the issuer's credit quality. You will pay a markup when you sell, just as you did when you bought.

Do I need a separate account to buy bonds, or can I use my existing brokerage account?

You can use your existing brokerage account if it is a full-service or discount brokerage. Bond-specific platforms may require a new account, but most let you link it to your existing bank or brokerage for transfers.

How do I know if a bond is a good deal or if the markup is too high?

Compare the price and yield on multiple platforms using the bond's CUSIP number. The markup is the difference between what you are quoted and the mid-market price. For most corporate bonds, a markup of $2 to $10 per $1,000 bond is typical; anything higher should prompt you to shop elsewhere.

What happens if the company that issued the bond goes bankrupt?

Bondholders are paid before stockholders in a bankruptcy, but you may not recover the full amount. The bond's rating reflects this risk — higher-rated bonds are safer but pay lower interest. This is why comparing credit ratings before you buy is important.