Government bonds are sold directly by the U.S. Treasury, through banks, and through brokers — you do not need a financial advisor or special account to start

You can buy U.S. Treasury bonds in three ways: directly from the Treasury through TreasuryDirect (an online platform run by the federal government), through a bank, or through a brokerage firm. TreasuryDirect is free and has no account minimums, but it only sells Treasury securities. Banks and brokers charge fees or commissions and may require minimum deposits, but they also sell bonds issued by states, cities, and corporations if you want options beyond Treasuries.

The simplest route for a first-time buyer is TreasuryDirect if you want only Treasury bonds, or a major brokerage (Fidelity, Schwab, Vanguard) if you want to compare different types of bonds in one place. Both routes let you see current prices and rates before you commit money.

Key Takeaways

  • TreasuryDirect is a free government website where you can buy Treasury bonds directly with no fees, no minimum investment, and no middleman.
  • Banks and brokerages charge fees but let you buy Treasury bonds, municipal bonds, corporate bonds, and bond funds all in one account.
  • Treasury bonds come in three main types: Treasury bills (under one year), Treasury notes (two to ten years), and Treasury bonds (20 to 30 years), each with different interest rates and maturity dates.
  • You can hold bonds until they mature and get your full principal back, or sell them before maturity — though selling early means accepting whatever price the market offers that day.
  • Interest rates and bond prices move in opposite directions, so when rates rise, existing bond prices fall, and vice versa.

Opening a TreasuryDirect account

Go to treasurydirect.gov and click "Open an Account." You will need a Social Security number, a valid email address, and a U.S. bank account for deposits and withdrawals. The account takes about 15 minutes to set up and costs nothing.

Once your account is open, you can browse upcoming Treasury auctions, see the current interest rates, and decide which bond type and maturity length fits your situation. TreasuryDirect shows you the exact rate you will receive before you bid, so there are no surprises.

Buying bonds through a bank or brokerage

If you already have a checking or savings account at a bank, you can usually buy Treasury bonds through that same bank's investment arm. Call your bank's investment department or log into your online banking portal to find the bond-buying section. Banks typically charge a flat fee per transaction (often $25 to $50) or a small percentage of the purchase amount.

Brokerages like Fidelity, Charles Schwab, and Vanguard let you open an investment account online in minutes. They charge commissions per trade (sometimes $0 for Treasury bonds, sometimes $1 to $10) and may require a minimum opening deposit, though many have lowered or eliminated minimums in recent years. The advantage is that one account gives you access to Treasuries, municipal bonds, corporate bonds, bond mutual funds, and stocks all in one place.

Understanding Treasury bond types and maturity dates

Treasury bills mature in four weeks to one year. They pay a lower interest rate than longer-term bonds because you are lending money for a shorter time. Treasury notes mature in two, three, five, seven, or ten years and pay a medium interest rate. Treasury bonds mature in 20 or 30 years and typically pay the highest interest rate because you are locking up your money for decades.

The longer you agree to lend money, the higher the interest rate the Treasury offers you. This is called the yield curve. When you buy a bond, you lock in that interest rate for the entire time you hold it. If you buy a 10-year Treasury note at 4% interest, you will receive 4% per year no matter what happens to interest rates in the broader economy.

Maturity date matters because it affects how much your bond's price will swing if you sell before maturity. A bond maturing in two years will have smaller price swings than a bond maturing in 30 years, all else equal.

How bond prices and interest rates relate

When you buy a bond, you are buying two things: the interest payments you will receive, and the return of your principal at maturity. If you hold the bond until it matures, the price you paid does not matter — you get your full principal back. But if you sell before maturity, you will receive whatever price the market is willing to pay that day.

Bond prices fall when interest rates rise. Here is why: if you bought a Treasury note paying 3% and interest rates rise to 5%, your bond is now less attractive to buyers because they can get 5% elsewhere. To sell it, you have to accept a lower price. The opposite happens when rates fall — your 3% bond becomes more valuable, and you can sell it for more than you paid.

This price movement does not affect you if you hold the bond to maturity. It only matters if you need to sell early or if you are tracking the value of your portfolio day to day.

Deciding how much to invest and what maturity to choose

Start by asking yourself two questions: When do you need this money, and what interest rate can you live with? If you need the money in three years, buying a 30-year bond exposes you to unnecessary price risk if you have to sell early. A three-year or five-year Treasury note is a better fit. If you do not need the money for 20 years, a longer-term bond locks in a higher rate for longer.

There is no minimum investment through TreasuryDirect — you can buy a single $100 Treasury bill if you want. Through a bank or brokerage, minimums vary but are often $1,000 to $5,000 per bond. Many people buy multiple bonds with different maturity dates (called a bond ladder) so that some money comes due each year, giving them flexibility and letting them reinvest at whatever rates are available then.

Taxes on bond interest and when to hold bonds in retirement accounts

Interest you earn on Treasury bonds is subject to federal income tax but not state or local income tax. This is one advantage Treasuries have over corporate or municipal bonds. You will receive a Form 1099-INT each January showing how much interest you earned, and you report that on your tax return.

If you hold bonds in a tax-advantaged retirement account (an IRA, 401(k), or similar), you do not pay tax on the interest each year — you only pay tax when you withdraw money from the account. This makes retirement accounts a good place for bonds if you have one available, because bonds generate steady interest income that would otherwise be taxed annually.

Municipal bonds (issued by states and cities) are often tax-free at the federal level and sometimes at the state level too, which can make them attractive if you are in a high tax bracket. But they pay lower interest rates than Treasuries to account for that tax advantage.

Selling a bond before maturity

If you need cash before your bond matures, you can sell it on the secondary market through your bank or brokerage. You will receive whatever price the market is offering that day. If interest rates have risen since you bought the bond, you will likely receive less than you paid. If rates have fallen, you may receive more.

Selling through TreasuryDirect is not possible — you can only hold bonds there until maturity or let them roll into a new purchase. If you think you might need to sell early, a bank or brokerage account gives you that option, though you will pay a commission to do so.

Frequently Asked Questions

What is the difference between buying a bond and buying a bond fund?

A bond fund is a mutual fund or exchange-traded fund (ETF) that holds many bonds and lets you own a piece of all of them. You get instant diversification and professional management, but you pay an annual fee (usually 0.05% to 0.5% of your investment per year). A bond fund does not have a maturity date — it exists as long as the fund company runs it. Individual bonds mature on a set date, and you get your principal back then.

Can I lose money on a Treasury bond?

If you hold a Treasury bond to maturity, you will get your full principal back — Treasuries are backed by the U.S. government and have never defaulted. If you sell before maturity and interest rates have risen, you will receive less than you paid, which is a loss. This is why maturity date and your time horizon matter.

Do I need a financial advisor to buy bonds?

No. TreasuryDirect and major brokerages are designed for individual investors and require no advisor. An advisor can help you build a broader investment strategy, but buying bonds yourself is straightforward and costs less.

What happens to my bond if the government shuts down?

Treasury bonds continue to pay interest and mature on schedule even during a government shutdown. The Treasury prioritizes bond payments because defaulting would damage the entire financial system. Your principal and interest are safe.

How do I know what interest rate I will get?

TreasuryDirect and brokerages show you the current rate for each bond type and maturity before you buy. The rate is set at auction and does not change once you purchase — you are locked in. Rates change daily based on market conditions, so the rate available today may be different tomorrow.