You buy government bonds through a brokerage account, a bank, or directly from the U.S. Treasury
The simplest route for most people is opening an account with a brokerage firm — companies like Fidelity, Charles Schwab, or Vanguard let you buy bonds the same way you'd buy stocks. You fund the account, search for the bond you want, and place an order. The bond is held in your account and you receive interest payments automatically.
If you want to buy directly from the federal government and skip the middleman, you can use TreasuryDirect, a free online system run by the U.S. Department of the Treasury. You create an account, link a bank account, and purchase bonds straight from the government. There are no fees and no broker involved. The trade-off is that TreasuryDirect has a simpler interface and fewer bond options than a brokerage — you can only buy Treasury bonds, bills, and notes, not corporate or municipal bonds.
Banks also sell government bonds, though they typically charge a commission and offer fewer choices than a brokerage. This route makes sense if you already have a relationship with your bank and want to keep everything in one place, but it's usually not the cheapest option.
Key Takeaways
- A brokerage account gives you access to all types of bonds — Treasury, corporate, and municipal — in one place, and most major brokerages charge no commission on bond trades.
- TreasuryDirect is free and has no fees, but only lets you buy bonds directly from the U.S. Treasury, not from other issuers.
- You need to decide whether you want to hold bonds until maturity or trade them before they mature, because that affects which purchase method makes sense.
- Government bonds are considered low-risk because they're backed by the U.S. government, but they pay lower interest rates than corporate bonds or savings accounts in some market conditions.
Opening a brokerage account to buy bonds
Most brokerages have the same basic setup: you fill out an online form with your name, address, Social Security number, and employment information. The firm runs a background check and opens your account within a few business days. You then link a bank account and transfer money into the brokerage account.
Once the money is there, you can search for bonds by type, maturity date, and interest rate. The brokerage shows you the current price, the yield (the interest rate you'll earn), and when the bond matures. You place an order just like buying a stock. The bond settles in your account within two business days, and you start receiving interest payments on the schedule the bond specifies — usually every six months for Treasury bonds.
The main advantage of a brokerage is flexibility. You can buy and sell bonds before they mature if you need the money, though you may get more or less than you paid depending on interest rates. You also have access to a wide range of bonds: U.S. Treasuries, corporate bonds, municipal bonds, and international government bonds. Most major brokerages charge no commission on bond trades, though they make money on the bid-ask spread (the difference between what they buy and sell bonds for).
Using TreasuryDirect for bonds straight from the government
TreasuryDirect is the U.S. Treasury's own platform for selling bonds to individuals. You go to treasurydirect.gov, create an account with your email and a password, and verify your identity. You link a bank account and you're ready to buy.
TreasuryDirect offers Treasury bills (short-term bonds maturing in a few weeks to a year), Treasury notes (medium-term, maturing in 2 to 10 years), and Treasury bonds (long-term, maturing in 20 or 30 years). You can also buy I Bonds and EE Bonds, which are savings bonds that protect against inflation or earn a fixed rate. There are no fees, no commissions, and no bid-ask spread — you pay exactly what the bond costs.
The trade-off is that TreasuryDirect is designed for people who plan to hold bonds until maturity. You can sell bonds before they mature, but you have to transfer them to a brokerage account first, which takes time and may involve fees. If you think you might need to sell early, a brokerage is more practical. TreasuryDirect also has purchase limits — you can buy up to $10,000 in bills, notes, and bonds per auction, and up to $10,000 in I Bonds per calendar year.
Understanding bond prices and how interest rates affect them
When you buy a bond, you're lending money to the government (or a corporation) for a set period. The bond has a face value (usually $1,000), an interest rate (called the coupon), and a maturity date (when you get your money back). If you hold the bond until maturity, you get the full face value plus all the interest payments.
But if you sell the bond before it matures, its price changes based on interest rates. If interest rates rise after you buy the bond, new bonds will pay higher rates, so your older bond becomes less attractive — its price drops. If interest rates fall, your bond becomes more attractive and its price rises. This is why bond prices and interest rates move in opposite directions.
This matters because it affects your decision about where to buy. If you're certain you'll hold until maturity, TreasuryDirect's simplicity and zero fees are ideal. If you think you might sell early or want to trade bonds as rates change, a brokerage gives you the flexibility and liquidity you need.
What to expect when you buy your first bond
After you place an order, the bond settles within two business days. Your account shows the bond as a holding, and you can see its current value, the interest rate, and the maturity date. Interest payments arrive on a schedule set by the bond — for most Treasury bonds, that's twice a year.
You don't have to do anything while you hold the bond. The interest payments come automatically, and when the bond matures, the face value is returned to your account. If you're using a brokerage and you want to sell before maturity, you can place a sell order anytime the market is open, and the money arrives in your account a couple of days later.
If you're using TreasuryDirect and want to sell before maturity, you'll need to transfer the bond to a brokerage account first. This process takes a few days and may involve a small fee, so it's worth planning ahead if you think you might need the money.
Comparing costs across purchase methods
TreasuryDirect has zero costs — no fees, no commissions, no spreads. You pay exactly what the bond is worth. This makes it the cheapest option if you're buying Treasury bonds and holding them to maturity.
A brokerage typically charges no commission on bond trades, but the firm makes money on the bid-ask spread. This is usually small — a few dollars on a $1,000 bond — but it adds up if you're buying and selling frequently. Some brokerages also charge fees for certain types of bonds or for selling before maturity, so check the fee schedule before you open an account.
Banks usually charge a commission on bond sales, typically $10 to $50 per bond. This makes them more expensive than a brokerage for most people, unless you're buying a very large quantity and can negotiate a better rate.
Deciding between holding to maturity and trading
Your investment strategy determines which purchase method makes the most sense. If you're buying bonds as a long-term holding — putting money away for retirement or a future goal and planning to collect interest payments until the bond matures — TreasuryDirect is the best choice. It's free, simple, and you don't have to worry about price fluctuations.
If you're an active investor who wants to trade bonds as interest rates change, or if you think you might need to sell before maturity, a brokerage is more practical. You pay a small spread on each trade, but you get flexibility and access to a wider range of bonds.
Most individual investors fall somewhere in the middle: they buy bonds to hold for several years but want the option to sell if circumstances change. For this group, a brokerage account is usually the best fit — the spreads are small, the interface is straightforward, and you're not locked in.
Frequently Asked Questions
Can I buy government bonds with a small amount of money?
Yes. Most brokerages and TreasuryDirect let you buy bonds in $100 increments or less. TreasuryDirect has a $100 minimum for most Treasury purchases. Brokerages vary, but most have no minimum. You don't need thousands of dollars to start.
What's the difference between Treasury bonds, Treasury notes, and Treasury bills?
They're all government debt, but they mature at different speeds. Bills mature in less than a year, notes mature in 2 to 10 years, and bonds mature in 20 or 30 years. Longer-term bonds usually pay higher interest rates because you're lending money for longer. All three are available through TreasuryDirect and most brokerages.
Do I have to pay taxes on bond interest?
Yes. Interest from government bonds is subject to federal income tax. Interest from Treasury bonds is not subject to state or local income tax, but interest from corporate or municipal bonds may be. Talk to a tax professional about how bond interest affects your tax situation.
What happens if I need to sell a bond before it matures?
You can sell through a brokerage anytime the market is open. The price depends on current interest rates — if rates have risen, you'll get less than you paid; if rates have fallen, you'll get more. If you're using TreasuryDirect, you have to transfer the bond to a brokerage first, which takes a few days.
Are government bonds safe?
Government bonds are considered very low-risk because they're backed by the U.S. government's ability to tax and print money. The risk of the government defaulting is extremely small. The main risk is that interest rates will rise after you buy, causing the bond's price to fall if you need to sell early.