What you need to do to buy government bonds

You can buy U.S. government bonds directly from the U.S. Treasury through TreasuryDirect, a free online platform, or through a bank or brokerage account. TreasuryDirect is the simplest route if you want to hold bonds until they mature — you open an account, link a bank account, and purchase bonds in amounts as small as $100. If you want to buy and sell bonds before maturity, or if you prefer working with a financial institution, you can buy them through a bank or brokerage firm instead, though you may pay a small fee.

The process takes about 15 minutes to set up if you go through TreasuryDirect. You'll need a Social Security number, a valid email address, and a U.S. bank account. Once your account is open, you can purchase bonds when ready. If you use a bank or brokerage, the setup is similar, but you'll follow that institution's specific procedures.

Key Takeaways

  • TreasuryDirect is a free government platform where you can buy Treasury bonds, bills, and notes directly without paying a broker fee.
  • You can also buy government bonds through a bank or brokerage account, which gives you the option to sell before maturity but may include transaction fees.
  • The minimum purchase through TreasuryDirect is $100, and you can buy in $100 increments after that.
  • Government bonds are considered low-risk because they're backed by the U.S. government, though they typically pay lower interest rates than other investments.

Opening a TreasuryDirect account

Go to treasurydirect.gov and click "Open an Account." You'll create a login, provide your Social Security number, and verify your identity. The site will ask for your name, address, and date of birth. This usually takes about 10 minutes.

Next, you'll link a bank account. TreasuryDirect uses this account to debit money when you buy bonds and to deposit money when bonds mature or you sell them. You can link a checking or savings account from any U.S. bank. The Treasury will make two small test deposits to verify the account is yours — these typically appear within one business day, and you'll confirm the amounts in your TreasuryDirect account to complete the link.

Once your bank account is verified, you're ready to purchase. Your account will remain active as long as you use it at least once every five years.

Types of Treasury bonds you can buy

Treasury Bills (T-Bills) mature in four weeks to one year. They're sold at a discount — you pay less than the face value and receive the full amount at maturity. For example, you might pay $990 for a $1,000 bill. The difference is your interest.

Treasury 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. A 10-year note paying 4% interest will send you $20 per $1,000 invested twice a year.

Treasury Bonds are the longest-term option, maturing in 20 or 30 years. Like notes, you receive interest payments every six months. The longer the maturity, the higher the interest rate typically is, because you're lending the money for a longer period.

I Bonds (Series I Savings Bonds) are designed to protect against inflation. The interest rate changes every six months and has two parts: a fixed rate that never changes, plus an inflation rate that adjusts based on the Consumer Price Index. You must hold an I Bond for at least one year, and if you sell before five years, you lose the last three months of interest.

How to place your first purchase

Log into your TreasuryDirect account and click "Buy Securities." Select the type of bond you want — for example, a 10-year Treasury Note. The site will show you the current interest rate and the next auction date.

Enter the amount you want to purchase in $100 increments. If you're buying a note or bond, you'll also choose whether you want to bid competitively or non-competitively. Non-competitive bidding is simpler for individual investors — you agree to accept whatever interest rate the auction produces, and your order is may provide to go through. Competitive bidding means you specify the interest rate you're willing to accept, but your order might not be filled if your bid is too low.

Review your order and confirm. The Treasury will debit your linked bank account on the settlement date, which is typically one to three business days after the auction. You'll receive a confirmation number and can track your purchase in your account dashboard.

Buying through a bank or brokerage instead

If you have a brokerage account with firms like Fidelity, Charles Schwab, or Vanguard, you can buy government bonds through that account. The process is similar to buying stocks: log in, search for the bond you want, and place an order. Banks also offer bond purchases, though they may have higher minimum amounts or fees.

The main advantage of using a brokerage is flexibility. You can sell a bond before it matures if you need the money, though the price you receive depends on current interest rates — if rates have risen since you bought, you'll receive less than you paid. You can also hold a wider range of bonds and set up automatic reinvestment of interest payments.

The main disadvantage is cost. Brokerages typically charge a transaction fee per bond purchase, ranging from $1 to $25 depending on the firm. TreasuryDirect charges nothing. Over time, these fees add up, especially if you're buying small amounts.

Understanding interest rates and maturity dates

The interest rate on a government bond is set at auction. The Treasury holds regular auctions for different bond types — for example, 10-year notes are auctioned monthly, while 30-year bonds are auctioned quarterly. The interest rate reflects what the market is willing to pay at that moment and changes with economic conditions.

When you buy a bond, you lock in that rate for the life of the bond. If you hold it to maturity, you'll receive the full face value plus all the interest payments you're owed. If you sell before maturity through a brokerage, the price you receive will be higher or lower depending on whether interest rates have fallen or risen since you bought.

For example, if you buy a $10,000 10-year note paying 4% interest, you'll receive $200 twice a year for 10 years, then get your $10,000 back. If you sell after five years and interest rates have risen to 5%, buyers will pay less than $10,000 because they can get a better rate elsewhere. If rates have fallen to 3%, buyers will pay more.

What happens when your bond matures

When a bond reaches its maturity date, the Treasury automatically deposits the face value into your linked bank account. If you bought through TreasuryDirect, you'll see the deposit within one business day of the maturity date. You can then use that money however you want — spend it, reinvest it in new bonds, or leave it in your account.

TreasuryDirect allows you to set up automatic reinvestment before a bond matures. This means the Treasury will use the proceeds to buy a new bond of the same type on the maturity date. This is useful if you want to maintain a steady stream of maturing bonds without having to manually purchase new ones each time.

Frequently Asked Questions

Can I lose money on a government bond?

If you hold a bond to maturity, you'll receive the full face value, so you won't lose principal. However, if you sell before maturity and interest rates have risen, you'll receive less than you paid. You also lose purchasing power if inflation rises faster than your bond's interest rate, though I Bonds are designed to protect against this.

How much money do I need to start?

Through TreasuryDirect, the minimum is $100. You can buy in $100 increments after that. Through a bank or brokerage, minimums vary — some firms have no minimum, while others require $1,000 or more per purchase.

Are government bonds taxed?

Interest from federal government bonds is subject to federal income tax but exempt from state and local income tax. You'll report the interest on your federal tax return each year. If you sell a bond before maturity for more than you paid, that gain is also taxable.

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

At auction through TreasuryDirect, you buy directly from the Treasury at the official interest rate. On the secondary market through a brokerage, you buy from another investor at whatever price they're willing to sell for. Secondary market prices fluctuate with interest rates, and you may pay a broker fee.

Can I withdraw my money early if I need it?

Through TreasuryDirect, you cannot withdraw before maturity — you must hold until the bond matures. If you need access to your money sooner, you can buy through a brokerage and sell on the secondary market, though you may receive less than you paid if interest rates have risen.