Government bonds are sold directly by the U.S. Treasury through TreasuryDirect, a free online platform where you can purchase them without a broker or middleman

You open a TreasuryDirect account, fund it with money from your bank account, and then place orders for the specific bonds you want. The Treasury holds your bonds in an electronic account — you don't receive a physical certificate. When your bond matures, the Treasury deposits the principal and any final interest payment back into your bank account. The whole process is free, and there are no trading fees or commissions.

You can also buy government bonds through a brokerage account at firms like Fidelity, Charles Schwab, or Vanguard, though you'll typically pay a small commission per transaction. Some brokerages charge nothing to buy Treasury bonds directly from the Treasury through their platform, but they may charge to buy bonds on the secondary market — meaning bonds that were issued earlier and are now being resold by another investor.

Key Takeaways

  • TreasuryDirect is free and lets you buy Treasury bonds, notes, and bills directly from the U.S. government without paying a broker commission.
  • You need a Social Security number, a valid email address, and a U.S. bank account to open a TreasuryDirect account.
  • Treasury bonds mature in 20 or 30 years, Treasury notes mature in 2 to 10 years, and Treasury bills mature in less than a year — each pays interest differently.
  • You can also buy government bonds through a brokerage account, which gives you access to bonds on the secondary market but usually involves a small fee.

Setting 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 ask you to create a username and password, set up security questions, and verify your identity by answering questions about your credit history — this is when ready and automated.

Once your account is open, you link a bank account for funding and withdrawals. The Treasury will make two small test deposits to that account (usually under $1 each) and ask you to confirm the amounts. This takes one to two business days. After you confirm, your account is fully funded and ready to buy bonds.

Understanding the three types of Treasury securities

Treasury bills (T-bills) mature in 4 weeks, 8 weeks, 13 weeks, 26 weeks, or 52 weeks. You buy them at a discount — meaning you pay less than the face value — and when they mature, the Treasury pays you the full face value. The difference is your interest. For example, you might pay $9,950 for a $10,000 bill, and when it matures in 13 weeks, you get $10,000. T-bills are the shortest-term option and carry the lowest interest rates.

Treasury notes (T-notes) mature in 2, 3, 5, 7, or 10 years. You pay the full face value upfront, and the Treasury pays you interest every six months until maturity. When the note matures, you get your principal back. A $10,000 note paying 4% interest will send you $200 every six months for the life of the note.

Treasury bonds (T-bonds) mature in 20 or 30 years. Like notes, you pay face value upfront and receive interest payments every six months. Because they're long-term, they typically pay higher interest rates than notes or bills. The trade-off is that if you need your money before maturity, you have to sell the bond on the secondary market, and its price will fluctuate based on interest rate changes.

How to place an order on TreasuryDirect

Log into your TreasuryDirect account and click "Buy Direct." The site shows you upcoming auctions for bills, notes, and bonds. Each auction has a specific date and time when bidding closes. You choose the security type and maturity you want, then decide whether to place a competitive or non-competitive bid.

A non-competitive bid means you agree to accept whatever interest rate the auction sets. This is the simpler choice for most individual investors — you're may provide to get the bonds you bid for at the auction's average rate. A competitive bid means you specify the interest rate you're willing to accept. If the auction's rate is lower than your bid, you get the bonds; if it's higher, you don't. Competitive bidding is usually for experienced investors or large purchases.

Enter the dollar amount you want to buy (the minimum is $100 for most securities), choose non-competitive, and submit your bid before the auction closes. The Treasury will deduct the money from your linked bank account on the settlement date, which is typically one to three business days after the auction. Your bonds then appear in your account.

Buying bonds through a brokerage account

If you already have a brokerage account at Fidelity, Schwab, Vanguard, or another firm, you can buy Treasury bonds directly through that account. Log in, navigate to the fixed income or bonds section, and search for Treasury securities. You can buy new issues (at upcoming auctions) or existing bonds on the secondary market.

Buying new issues through a brokerage is usually free or costs a small flat fee. Buying on the secondary market — bonds that were issued earlier and are now being resold — may carry a commission of $1 to $10 per bond, depending on the firm. Some brokerages charge nothing for secondary market purchases; others charge a percentage of the trade value. Check your brokerage's fee schedule before you buy.

The advantage of using a brokerage is convenience if you're already investing there, and access to a wider range of bonds on the secondary market. The disadvantage is that you'll pay fees, and the process is less transparent than TreasuryDirect. If you're buying small amounts or just getting started, TreasuryDirect is usually the better choice.

What happens when your bond matures

On the maturity date, the Treasury automatically deposits your principal and any final interest payment into the bank account linked to your TreasuryDirect account or brokerage account. You don't have to do anything. If you bought a $10,000 bond, you'll receive $10,000 plus any accrued interest.

Once the money lands in your account, you can spend it, reinvest it in new bonds, or leave it sitting. If you want to buy more bonds, you can place a new order when ready — there's no waiting period. Many investors set up a ladder of bonds with different maturity dates so that money comes due at regular intervals, giving them flexibility to reinvest or use the cash.

Selling a bond before it matures

If you need to sell a Treasury bond before its maturity date, you must use the secondary market. On TreasuryDirect, click "Sell Direct" and enter the security you want to sell. The Treasury connects you with a buyer and settles the trade within one business day. You'll receive the current market price, which may be higher or lower than what you paid depending on interest rate changes.

If interest rates have risen since you bought the bond, its market price will be lower — buyers won't pay full price for a bond paying below-market interest. If rates have fallen, the price will be higher. This is why long-term bonds (like the 30-year Treasury bond) are more sensitive to interest rate swings than short-term ones.

Through a brokerage, selling is similar: you place a sell order, and the firm executes it on the secondary market. You'll pay a commission, and the trade settles in one to two business days.

Tax treatment of Treasury bond interest

Interest you earn on Treasury bonds is subject to federal income tax but is exempt from state and local income tax. This is one reason Treasuries appeal to investors in high-tax states. You don't pay tax when you buy the bond or when it matures — you pay tax only on the interest income each year.

TreasuryDirect and your brokerage will send you a Form 1099-INT each January showing the interest you earned in the previous year. You report this on your federal tax return. If you sold a bond on the secondary market for more than you paid, you'll also owe capital gains tax on the profit.

Frequently Asked Questions

What's the minimum amount I can invest in Treasury bonds?

On TreasuryDirect, the minimum purchase is $100 for most securities, and you can buy in $100 increments up to $5 million per auction. Through a brokerage, minimums vary by firm but are typically $100 to $1,000 per bond.

Can I lose money on a Treasury bond?

If you hold the bond to maturity, you'll get your full principal back — there's no default risk because the U.S. government backs the bonds. If you sell before maturity, you could lose money if interest rates have risen, because the bond's market price will be lower. You won't lose money on interest payments; the Treasury always pays what it owes.

How often do Treasury auctions happen?

The Treasury holds auctions regularly: bills are auctioned weekly, notes are auctioned monthly or more frequently, and bonds are auctioned a few times per year. TreasuryDirect shows the auction calendar, so you can see upcoming dates and plan your purchases.

Can I buy Treasury bonds in an IRA or 401(k)?

Yes. Most IRAs and 401(k)s allow you to hold Treasury bonds. You buy them through your retirement account's brokerage platform the same way you'd buy them in a regular account. The tax benefits of the retirement account explore — you won't owe federal income tax on the interest until you withdraw money in retirement.

What's the difference between buying at auction and buying on the secondary market?

At auction, you buy directly from the Treasury at the official interest rate set that day, with no commission. On the secondary market, you buy from another investor through a brokerage, and the price and interest rate reflect current market conditions. Secondary market bonds may offer better rates if interest rates have risen since they were issued, but you'll pay a commission.