You can buy government bonds directly from the U.S. Treasury or through a bank or brokerage
The simplest route is TreasuryDirect, a free online platform run by the U.S. Department of the Treasury. You create an account, link a bank account, and buy bonds directly without paying a middleman fee. The Treasury holds your bonds electronically and handles all the paperwork. This works well if you want to hold bonds until they mature and don't plan to sell them early.
If you want to sell bonds before maturity or prefer working with a financial institution, you can buy them through a bank, credit union, or brokerage firm like Fidelity, Schwab, or Vanguard. These institutions charge a fee or markup, but they offer more flexibility and can help you manage a larger portfolio. Some brokerages waive fees for Treasury purchases to attract customers, so it's worth asking.
A third option is buying bonds on the secondary market — meaning bonds that other investors are selling. This happens through brokerages and can give you access to older bonds with different terms, though prices fluctuate based on interest rates and demand.
Key Takeaways
- TreasuryDirect is free and lets you buy directly from the U.S. Treasury, but you cannot sell bonds early without moving them to a brokerage first.
- Banks and brokerages charge fees but offer more flexibility, including the ability to sell bonds before maturity.
- You need a Social Security number, a bank account, and a minimum purchase amount that varies by bond type — typically $100 for most Treasury bonds.
- Bonds are sold at auctions held on a regular schedule; you can place a bid for a specific amount and interest rate.
- Interest payments are deposited directly into your bank account, and you pay federal income tax on the interest but no state or local tax.
How to set up a TreasuryDirect account
Go to treasurydirect.gov and click "Open an Account." You'll need your Social Security number, a valid email address, and a U.S. bank account. The site will verify your identity by asking questions about your financial history — this usually takes a few minutes. Once approved, you can link your bank account and start buying bonds within the same day.
TreasuryDirect requires you to set up a login with a username and password, and the site uses two-factor authentication for security. Keep your login information safe; if someone gains access to your account, they can move your bonds or change your bank account details. The Treasury does not call or email asking for your password, so treat any such request as a scam.
Understanding the types of Treasury bonds you can buy
Treasury bills (T-bills) mature in four weeks to one year. You buy them at a discount — meaning you pay less than the face value — and receive the full face value when they mature. The difference is your interest. T-bills are the safest short-term investment and are popular with people who want to park cash temporarily.
Treasury notes (T-notes) mature in two to ten years and pay interest every six months. You buy them at or near face value and receive the full amount back at maturity. They offer higher interest rates than T-bills because you're lending money for longer.
Treasury bonds (T-bonds) mature in 20 or 30 years and also pay interest twice a year. They carry the highest interest rates of the three because the lending period is longest, but they're also most sensitive to interest rate changes. If rates rise after you buy, your bond's value falls if you try to sell it early.
I Bonds (Series I Savings Bonds) are designed to protect against inflation. The interest rate adjusts every six months based on inflation data. You must hold them for at least one year, and if you sell within five years, you lose the last three months of interest. I Bonds have an annual purchase limit of $10,000 per person through TreasuryDirect.
The auction process and how to place a bid
The Treasury holds auctions on a regular schedule — typically weekly for T-bills, monthly for T-notes and T-bonds, and monthly for I Bonds. You can see the full schedule on treasurydirect.gov. Each auction has a specific date and time when bidding closes.
When you place a bid, you choose between a competitive bid and a non-competitive bid. Most individual investors use non-competitive bids, which means you agree to accept whatever interest rate the auction determines. You specify only the dollar amount you want to buy (the minimum is usually $100). Non-competitive bids are almost always filled.
Competitive bids let you specify the exact interest rate you're willing to accept, but if the auction sets a lower rate, your bid is rejected. Competitive bidding is mainly used by large institutions and is rarely worth the complexity for individual investors.
You place your bid through TreasuryDirect before the auction closes. The Treasury then conducts the auction, determines the interest rate, and deposits your bonds into your account. The whole process takes a few business days.
Buying bonds through a bank or brokerage
Open an account with the financial institution of your choice — most major banks and all major brokerages offer Treasury purchases. You'll need to provide your Social Security number, address, and employment information for account verification.
Once your account is open, look for the Treasury or fixed-income section of the platform. You can usually search for bonds by maturity date or interest rate. Select the bond you want, enter the quantity, and place your order. The institution will execute the trade and hold the bonds in your account.
Fees vary widely. Some brokerages charge $1 to $25 per transaction; others charge a percentage of the purchase amount or a flat annual fee. A few major brokerages (including Fidelity and Schwab) offer commission-free Treasury purchases to attract customers. Ask about fees before opening an account if cost matters to you.
The advantage of using a brokerage is that you can sell bonds before maturity if you need the money. You'll receive whatever the current market price is, which may be higher or lower than what you paid depending on interest rate movements. TreasuryDirect does not allow early sales; you must transfer bonds to a brokerage first, which takes time and may involve a fee.
What happens after you buy: interest payments and taxes
Interest on Treasury notes and bonds is deposited directly into your bank account every six months. For T-bills, the interest is paid as the difference between your purchase price and the face value you receive at maturity. For I Bonds, interest is added to the bond's value and paid when you cash it in.
You owe federal income tax on all Treasury interest. The Treasury will send you a Form 1099-INT each January showing the interest you earned in the previous year; you report this on your tax return. You do not owe state or local income tax on Treasury interest, which is one reason they appeal to people in high-tax states.
If you hold bonds in a tax-advantaged account like an IRA or 401(k), the interest grows tax-deferred or tax-free depending on the account type. This can make Treasuries especially useful for retirement savings.
Selling bonds before maturity
If you need to cash out early, you have two options. Through TreasuryDirect, you can only sell bonds that have been held for at least 45 days. You initiate a sale through your account, and the Treasury sells your bonds on the secondary market on your behalf. The sale usually settles within a few business days, and you receive the current market price — not the price you paid.
If you bought bonds through a brokerage, selling is simpler: you place a sell order through the same platform where you bought them, and the transaction settles in one or two business days. Brokerages may charge a small fee for the sale.
The risk of selling early is that if interest rates have risen since you bought the bond, the market price will be lower than your purchase price. Conversely, if rates have fallen, you can sell at a profit. This is why longer-term bonds (like 30-year T-bonds) are more sensitive to interest rate changes than shorter-term bonds.
Frequently Asked Questions
What's the minimum amount I need to invest in Treasury bonds?
Through TreasuryDirect, the minimum is typically $100 for most bond types, and you can buy in $100 increments up to $5 million per auction. Through a brokerage, minimums vary by institution but are often $1,000 or less. Some brokerages have no minimum at all.
Can I lose money on a Treasury bond?
If you hold a bond to maturity, you get your full principal back plus all promised interest — there's no default risk because the U.S. government backs the bonds. If you sell before maturity, you could receive less than you paid if interest rates have risen. You cannot lose money by holding to maturity.
How do I know what interest rate I'll get?
The interest rate is determined at the auction. If you place a non-competitive bid, you won't know the exact rate until after the auction closes — usually the same day or the next business day. If you want to know the rate in advance, you can place a competitive bid, but this is rarely practical for individual investors.
Can I buy Treasury bonds for someone else, like a child?
Through TreasuryDirect, you can buy I Bonds as a gift for a minor, but the bond must be registered in the child's name and Social Security number. For other bond types, you can buy them in anyone's name if you have their Social Security number, but the account owner controls the bonds. Consult a tax professional about the tax implications of gifting bonds.
What happens to my bonds if I die?
Your bonds become part of your estate and pass to your heirs according to your will or state law. If you registered a beneficiary with TreasuryDirect, that person can claim the bonds without going through probate. It's worth setting up a beneficiary when you open your account.