You can buy government bonds directly from the U.S. Treasury, through a bank or brokerage, or from a bond dealer
The cheapest and most straightforward route is TreasuryDirect, the Treasury Department's online platform where you buy bonds straight from the government with no middleman fees. You create an account, link a bank account, and purchase bonds in denominations as small as $100. The trade-off is that TreasuryDirect has a slower, more manual interface and you cannot sell bonds before maturity — you can only hold them until they mature or use a limited early withdrawal option.
If you want more flexibility, a brokerage account (through firms like Fidelity, Schwab, or Vanguard) lets you buy Treasury bonds, municipal bonds, and corporate bonds on the secondary market, meaning you can sell before maturity. You pay a small commission per trade, typically $0 to $10 depending on the firm. Banks also sell bonds, though they often charge higher markups than brokerages and offer less choice.
For most individual investors, TreasuryDirect works well if you plan to hold bonds to maturity and want the lowest cost. A brokerage makes sense if you might need to sell early, want to compare many bond options at once, or plan to buy bonds regularly.
Key Takeaways
- TreasuryDirect is the government's own platform and charges no fees, but you cannot sell bonds before they mature and the website is slow to navigate.
- A brokerage account lets you buy and sell bonds on the secondary market with small commissions, giving you more flexibility if your plans change.
- Banks sell bonds but typically charge higher markups than brokerages and offer fewer options to choose from.
- You need a Social Security number, a bank account, and a way to verify your identity to open any of these accounts.
- Bond prices move in the opposite direction from interest rates, so buying when rates are high locks in better returns.
How to set up a TreasuryDirect account
Go to treasurydirect.gov, click "Open an Account," and provide your name, address, Social Security number, and date of birth. You will verify your identity through a third-party service (usually by answering questions about your credit history or providing a driver's license photo). The process takes about 10 minutes.
Once approved, link a checking or savings account from a U.S. bank. This is where money comes out when you buy bonds and where the Treasury deposits interest payments and principal when bonds mature. You can then browse available bonds — Treasury bills (short-term), notes (2 to 10 years), and bonds (20 to 30 years) — and place orders during the bidding window, which opens a few days before each auction.
TreasuryDirect holds your bonds in electronic form (no paper certificates). You can view your holdings anytime, set up automatic reinvestment of interest, or request an early withdrawal if you need cash before maturity (though this comes with a penalty).
Buying bonds through a brokerage account
Open an account at a brokerage by providing your name, address, Social Security number, and employment information. Most brokerages complete this in minutes and let you start trading the same day. Fund the account by linking a bank account or transferring money from another investment account.
Once funded, search the bond section of the platform. You will see Treasury bonds, municipal bonds (issued by states and cities), corporate bonds (issued by companies), and sometimes international bonds. Each listing shows the interest rate, maturity date, price, and yield. You can filter by maturity date, credit rating, or yield to narrow your choices. Click to buy, and the trade settles in one to three business days.
The main advantage is speed and choice — you can compare hundreds of bonds side by side and sell any bond before maturity if you need the cash. The main disadvantage is that you pay a commission (usually $0 to $10 per trade) and you may pay a markup if the bond is not heavily traded. For Treasury bonds specifically, the markup is usually tiny because they trade constantly.
Buying bonds at a bank
You can walk into most banks and ask to buy bonds. The bank will take your order, charge you a fee (often $25 to $50 per bond), and deliver the bond to you or hold it in their custody. The bank may also offer their own bond funds, which bundle many bonds together and charge an annual management fee.
Banks are convenient if you already have a relationship there and want personal service, but they are rarely the cheapest option. Their fees are higher than brokerages, and they typically stock fewer bonds to choose from. If you are buying a single Treasury bond and want to hold it to maturity, the bank's fee might be worth the simplicity. If you are buying multiple bonds or want flexibility, a brokerage is usually better.
Understanding the difference between new bonds and secondary market bonds
When you buy a bond directly from the issuer (through TreasuryDirect for Treasuries, or through the issuer's website for some municipal or corporate bonds), you are buying a new bond at par value, meaning you pay the face amount — usually $100 or $1,000. You receive the full interest rate promised when the bond was issued.
When you buy a bond through a brokerage, you are usually buying on the secondary market, meaning you are buying from another investor who is selling. The price may be higher or lower than par depending on how interest rates have moved since the bond was issued. If rates have fallen, the bond's price rises (because its interest rate is now more attractive). If rates have risen, the price falls. You still receive the same interest payments, but your actual return depends on what you paid.
For Treasury bonds, the secondary market is huge and liquid, so prices are fair and spreads are tight. For less-traded bonds, the secondary market can be thin, and you may pay a wider markup. TreasuryDirect avoids this by letting you buy new Treasuries at par, but you give up the ability to sell early.
What to know about bond auctions and bidding
The Treasury holds auctions on a regular schedule — bills weekly, notes and bonds monthly. During the auction window (usually a few days before the sale date), you can place an order through TreasuryDirect. You choose a noncompetitive bid, which means you agree to accept whatever interest rate the auction sets, or a competitive bid, where you specify the yield you are willing to accept (this is rarely worth it for individual investors).
Most individuals use noncompetitive bids because they are simple and may provide to go through. Your order is filled at the average rate set by the auction. You find out the rate a day or two after the auction closes, and the bond settles a few days later. Through a brokerage, you skip the auction process entirely — you simply buy bonds that are already issued and trading.
Comparing costs: TreasuryDirect vs. brokerage vs. bank
| Route | Upfront Cost | Can Sell Early | Speed | Best For |
|---|---|---|---|---|
| TreasuryDirect | $0 | No (early withdrawal penalty applies) | Slow (auction-based) | Buy-and-hold investors, small amounts, lowest cost |
| Brokerage | $0–$10 per trade | Yes | Fast (same day) | Flexibility, comparing many bonds, frequent buyers |
| Bank | $25–$50 per bond | Yes (may charge exit fee) | Varies | Personal service, existing bank relationship |
Frequently Asked Questions
Do I need a minimum amount of money to buy bonds?
TreasuryDirect lets you start with $100. Most brokerages have no minimum to open an account, though some require $500 to $1,000 to buy individual bonds (bond funds often have lower minimums). Banks typically sell bonds in $1,000 or $5,000 increments.
Can I buy bonds for someone else, like a child?
Yes. TreasuryDirect lets you open an account for a minor using their Social Security number. Brokerages can set up custodial accounts where you manage the bonds on behalf of a child until they reach adulthood. Banks can also do this, though fees may apply.
What happens if I need to sell a bond before it matures?
Through a brokerage, you can sell anytime on the secondary market. Through TreasuryDirect, you can request an early withdrawal, but the Treasury charges a penalty equal to the last three months of interest. A bank may also let you sell, but they may charge a fee or offer you an unfavorable price.
How do I know which bond to buy?
Start by deciding how long you can lock your money away (the maturity date) and how much risk you are comfortable with. Treasury bonds are safest but pay lower rates. Municipal and corporate bonds pay higher rates but carry more risk. A brokerage's bond screener can filter by these factors. If you are unsure, a financial advisor can help you build a bond ladder.
Can I buy bonds if I do not have a bank account?
TreasuryDirect and most brokerages require a U.S. bank account to fund your account and receive payments. If you do not have one, you will need to open a checking or savings account first, which most banks do for free.