You can buy U.S. government bonds directly from the Treasury Department through TreasuryDirect, or through a bank or brokerage firm

The simplest route for most people is TreasuryDirect, the Treasury Department's online platform where you buy bonds straight from the government with no middleman fees. You set up an account, link a bank account, and purchase bonds in amounts as small as $100. The other route is buying through a bank, brokerage, or investment firm — they charge a fee or markup, but some people prefer this if they already have an account there or want a person to talk to.

Which route makes sense depends on how much you want to buy, whether you already bank somewhere, and whether you want to manage the account yourself online or have someone else handle it. Both methods are legitimate; the difference is mainly convenience and cost.

Key Takeaways

  • TreasuryDirect is free to use and lets you buy bonds directly from the U.S. Treasury with no fees, but you must manage your account online.
  • Banks and brokerages charge fees or markups to buy bonds for you, but they may offer customer service or let you hold bonds alongside other investments.
  • You need a Social Security number, a valid email address, and a U.S. bank account to open a TreasuryDirect account.
  • Treasury bonds come in different types — bills, notes, and bonds — with different maturity dates, and you choose which one to buy based on how long you want to hold it.
  • Once you buy a bond, you can hold it until it matures and get your money back, or sell it before maturity on the secondary market (though the price may be higher or lower than you paid).

Setting up a TreasuryDirect account

To buy bonds through TreasuryDirect, 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. The site will ask you to create a username and password, then verify your identity by answering security questions based on your credit history.

Once your account is open, you link your bank account so money can move in and out. The Treasury uses this account to debit money when you buy bonds and to deposit money when bonds mature or you sell them. The whole setup takes about 15 minutes. After that, you can buy bonds anytime the market is open — which is Monday through Friday during regular business hours, except federal holidays.

TreasuryDirect charges no fees. You pay only the price of the bond itself. This is why many people prefer it to banks or brokerages, which typically charge $25 to $100 per transaction or add a markup to the bond price.

Buying bonds through a bank or brokerage

If you already have a checking or investment account at a bank or brokerage — such as Fidelity, Charles Schwab, Vanguard, or your local bank — you can buy Treasury bonds through them. The process is usually simpler than opening a new account: you log into your existing account, find the bond or Treasury section, and place an order.

The trade-off is cost. Banks and brokerages typically charge a flat fee per transaction (often $25 to $100) or add a markup to the bond price (usually 0.5% to 2% of the purchase amount). Over time, these fees can reduce your return. However, some people choose this route because they can hold bonds in the same account as stocks, mutual funds, or other investments, or because they prefer to call someone on the phone if they have questions.

Some brokerages offer lower fees or no fees for Treasury purchases if you meet certain account balance requirements. It is worth asking your bank or brokerage what they charge before you buy.

Understanding the types of Treasury bonds and their maturity dates

The Treasury sells three main types of bonds, each with a different maturity date — the date when the government pays you back your principal:

  • Treasury Bills (T-Bills): Mature in 4 weeks, 8 weeks, 13 weeks, 26 weeks, or 52 weeks. These are the shortest-term option and are sold at a discount (you pay less than the face value upfront, and the difference is your interest).
  • Treasury Notes (T-Notes): Mature in 2, 3, 5, 7, or 10 years. These pay interest every six months and are the most commonly bought by individual investors.
  • Treasury Bonds (T-Bonds): Mature in 20 or 30 years. These also pay interest every six months and lock in a rate for decades.

When you buy a bond, you choose which maturity date you want. A shorter maturity means you get your money back sooner but usually earn a lower interest rate. A longer maturity means you earn a higher rate but your money is tied up for years. The interest rate (called the yield) changes based on market conditions and is set at the time of the auction.

You do not have to hold a bond until it matures. You can sell it before maturity on the secondary market — meaning you sell it to another investor through a broker. If interest rates have fallen since you bought it, your bond may be worth more than you paid. If rates have risen, it may be worth less.

How the auction process works

The Treasury holds auctions on a regular schedule to sell new bonds. For example, 4-week T-Bills are auctioned every week, while 10-year notes are auctioned monthly. When you place an order through TreasuryDirect or a broker, you are bidding in that auction.

There are two ways to bid: competitive or noncompetitive. In a competitive bid, you specify the yield (interest rate) you are willing to accept. If the auction yield is lower than your bid, you get the bond at your rate; if it is higher, your bid is rejected. Most individual investors use noncompetitive bids, which means you accept whatever yield the auction sets. Noncompetitive bids are almost always filled.

After the auction closes, the Treasury announces the results, including the yield that was set. Your account is debited, and the bonds are credited to your account. The whole process takes a few days. You can then hold the bonds, sell them, or let them mature.

Minimum purchase amounts and holding periods

Through TreasuryDirect, you can buy as little as $100 per bond and increase in $100 increments. There is no maximum. This makes it possible to start small if you are new to bonds.

Through a bank or brokerage, minimums vary. Some firms have no minimum; others require $1,000 or more per purchase. Check with your institution before you try to buy.

There is no required holding period. You can sell a bond the day after you buy it if you want, though you will pay a transaction fee and the price may be higher or lower than what you paid. Most people buy bonds intending to hold them for at least some time, because the interest rate is locked in and selling early means you are subject to market price changes.

Taxes on 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 some people in high-tax states prefer Treasuries to other investments.

You report the interest on your federal tax return each year. If you hold the bond through TreasuryDirect, the Treasury will send you a Form 1099-INT showing how much interest you earned. If you hold it through a broker, the broker sends the form.

If you sell a bond before maturity and the sale price is higher than what you paid, the difference is a capital gain and is also taxable. If the price is lower, it is a capital loss, which can offset other gains.

Frequently Asked Questions

Can I buy Treasury bonds if I do not have much money to start with?

Yes. TreasuryDirect lets you buy bonds in $100 increments with no account fees, so you can start with $100 if you want. Banks and brokerages may have higher minimums, but many have none. Check with your institution.

What happens if I need my money before the bond matures?

You can sell the bond on the secondary market through a broker before maturity. The price depends on current interest rates and market conditions — it may be higher or lower than you paid. You will pay a transaction fee to sell. If you need the money urgently, selling may not be ideal because the price is not may provide.

How do I know what interest rate I will get?

The interest rate is set at the Treasury auction and depends on market demand and economic conditions. You do not know the exact rate until after the auction closes. If you use a noncompetitive bid through TreasuryDirect, you accept whatever rate is set. If you bid competitively, you can specify a minimum rate you will accept.

Is it better to buy through TreasuryDirect or a bank?

TreasuryDirect has no fees, so you keep more of your interest. A bank or brokerage may charge $25 to $100 per purchase or add a markup. However, some people prefer a bank if they want customer service or want to hold bonds alongside other investments in one account. The choice depends on your situation and how much you value convenience versus cost.

Can I buy Treasury bonds for someone else, like a child?

Through TreasuryDirect, you can open an account only for yourself using your own Social Security number. You cannot open an account in someone else's name. However, you can buy bonds through a broker and hold them in a custodial account for a minor, or gift bonds to someone after you buy them. Rules vary by broker, so ask before you buy.