You can buy U.S. Treasury bonds directly from the federal government without a broker or bank

The simplest route is TreasuryDirect, a website run by the U.S. Department of the Treasury. You create an account, link a bank account, and buy bonds online in amounts as small as $100. The Treasury holds your bonds in an electronic account — you do not receive a paper certificate. You pay no fees, no commissions, and no markups. This is the same price the government offers to everyone.

You can also buy Treasury bonds through a bank or brokerage firm, but you will pay a commission or markup on top of the bond's price. For most individual buyers, TreasuryDirect is cheaper and faster. The trade-off is that TreasuryDirect's website is basic and does not offer the same tools or customer service that a brokerage does.

Treasury bonds are loans you make to the federal government. In exchange, the government pays you interest twice a year and returns your money on a set date. The longer you lend the money, the higher the interest rate — a 30-year bond pays more than a 2-year bond. If you need your money back before the bond matures, you can sell it, but you may get less than you paid if interest rates have risen.

Key Takeaways

  • TreasuryDirect is the official government website where you can buy Treasury bonds with no fees or commissions, starting with as little as $100.
  • You must create an account, verify your identity, and link a checking or savings account to buy bonds through TreasuryDirect.
  • Treasury bonds come in different lengths — 4 weeks to 30 years — and the interest rate is higher for longer terms.
  • You can hold bonds until they mature and get your full money back, or sell them early on the secondary market at whatever price buyers will pay.
  • Banks and brokerages also sell Treasury bonds, but they charge fees or markups that TreasuryDirect does not.

Setting up a TreasuryDirect account

Go to treasurydirect.gov and click "Open an Account." You will need a Social Security number, an email address, and a U.S. mailing address. The site will ask you to create a username and password and to answer security questions.

Next, you verify your identity. TreasuryDirect uses a third-party service to check your name, address, and date of birth against government records. This usually takes a few minutes. If verification fails, you can mail in a form with a copy of your driver's license or passport, but this adds weeks to the process.

Once your identity is verified, you link a bank account. You provide your routing number and account number from a checking or savings account in your name. The Treasury will make two small test deposits to that account — usually within one business day — and you confirm the amounts in your TreasuryDirect account to prove you own the bank account. Only then can you buy bonds.

Choosing which Treasury bond to buy

Treasury bonds are named by how long until they mature. A 4-week Treasury bill matures in 4 weeks. A 2-year note matures in 2 years. A 30-year bond matures in 30 years. The longer the term, the higher the interest rate the government pays you.

The current interest rates for each term are posted on treasurydirect.gov. Rates change every time the Treasury holds an auction — roughly every week for short-term bills, every month for notes, and every few months for bonds. You can see the auction schedule and the rates offered at each one.

If you are saving for a goal that is 5 years away, a 5-year note makes sense — your money is locked in at a known rate, and you get it back when you need it. If you do not know when you will need the money, a shorter-term bond is safer because you can reinvest the money sooner if rates rise. If you are saving for retirement and do not need the money for 20 years, a longer-term bond locks in the current rate for the full period.

Placing an order on TreasuryDirect

Log into your TreasuryDirect account and go to "Buy Securities." Select the type of bond you want — for example, "Treasury Bonds" or "Treasury Notes" — and the term. You will see the next auction date and the current bid-to-cover ratio, which shows how many bids the Treasury received for each dollar offered. A high ratio means the bond is popular.

You enter the amount you want to buy, in multiples of $100. The minimum is $100. You can buy up to $5 million in a single auction, though most individual buyers purchase much less.

You choose between a competitive bid and a noncompetitive bid. A noncompetitive bid means you accept whatever interest rate the auction sets — this is what most individual buyers do. A competitive bid means you name the lowest interest rate you will accept, and if the auction rate is lower, your bid is rejected. Competitive bidding is mainly for large institutional buyers.

After you place your order, it sits until the auction date. On auction day, the Treasury sets the interest rate, and your order is filled at that rate. You will see the confirmation in your account within one business day.

How interest payments and maturity work

Once you own a Treasury bond, the government pays you interest twice a year. For a 30-year bond bought at a 4% annual rate, you receive 2% of your investment every six months. The payments go directly to your linked bank account.

On the maturity date, the Treasury deposits your original investment plus the final interest payment into your bank account. For example, if you bought a $10,000 bond, you get $10,000 back on maturity day, plus the last interest payment.

If you need your money before maturity, you can sell the bond on the secondary market through a bank or brokerage. The price you get depends on current interest rates. If rates have risen since you bought the bond, buyers will pay less than you did because your bond pays a lower rate. If rates have fallen, buyers will pay more. You will owe a commission to whoever sells the bond for you.

Buying Treasury bonds through a bank or brokerage

Banks and brokerages like Fidelity, Schwab, and Vanguard all sell Treasury bonds. The process is similar to TreasuryDirect: you open an account, link a bank account, and place an order. The difference is that the bank or brokerage charges a fee or markup — usually $25 to $50 per transaction, or a percentage of the purchase price.

The advantage is customer service and tools. A brokerage can show you charts of historical rates, help you build a bond ladder (buying bonds that mature at different times), and answer questions by phone. TreasuryDirect offers none of this.

For a small purchase — say, $1,000 — a $50 commission is 5% of your money, which is expensive. For a large purchase — say, $100,000 — the same $50 commission is 0.05%, which is reasonable. If you are buying a small amount and do not need customer service, TreasuryDirect is almost always the better choice.

Understanding the risks and trade-offs

Treasury bonds are considered the safest investment available because they are backed by the U.S. government. You will get your money back on the maturity date — the only risk is if the government defaults, which has never happened.

The real risk is interest rate risk. If you buy a 30-year bond at 4% and interest rates rise to 5%, your bond is now worth less because new bonds pay more. If you need to sell before maturity, you will take a loss. If you hold until maturity, you get your full investment back, but you have locked in a lower rate while newer bonds pay more.

Another consideration is inflation. If you buy a bond that pays 3% and inflation rises to 4%, your purchasing power actually declines. You are earning less than the cost of living. The Treasury offers Treasury Inflation-Protected Securities (TIPS) that adjust for inflation, but they pay a lower base rate.

Frequently Asked Questions

Do I have to hold a Treasury bond until it matures?

No. You can sell it anytime on the secondary market through a bank or brokerage. The price you receive depends on current interest rates and how much time is left until maturity. If you sell before maturity, you may receive more or less than you paid.

What is the minimum amount I can buy?

On TreasuryDirect, the minimum is $100. You can buy in $100 increments up to $5 million per auction. Banks and brokerages may have different minimums, usually $1,000 or more.

How long does it take to get my money after I place an order?

Your order is placed on the auction date, and the Treasury confirms it within one business day. Interest payments and maturity proceeds are deposited to your bank account on the scheduled dates. If you sell a bond early, settlement usually takes two business days.

Can I buy Treasury bonds for a child or as a gift?

On TreasuryDirect, you can only buy bonds in your own name with your own Social Security number. To buy for a child, you would need to open an account in their name (with their Social Security number) if they are old enough, or use a custodial account through a bank or brokerage.

What happens if I need my money back before the maturity date?

You can sell the bond on the secondary market through a bank or brokerage. The price depends on current interest rates. If rates have risen, you will receive less than you paid. If rates have fallen, you may receive more. You will owe a commission to the firm that sells it.