You can buy government bonds directly from the U.S. Treasury, through a bank or brokerage, or via a financial advisor
The route you choose depends on whether you want to avoid fees, prefer a hands-off approach, or need help deciding which bond fits your situation. The Treasury's own platform, TreasuryDirect, charges no fees and lets you hold bonds in a government account. Banks and brokerages charge commissions or markups but offer a wider range of bonds and let you sell before maturity if you need the money. A financial advisor can guide you through the options but will charge a fee for that service.
Each route has different rules about minimum purchases, how quickly you can access your money, and what happens if you want to sell early. Understanding these differences helps you pick the method that matches your goals and how long you plan to hold the bonds.
Key Takeaways
- TreasuryDirect is free and lets you buy bonds straight from the U.S. Treasury with no middleman, but you must hold most bonds until maturity or face a penalty.
- Banks and brokerages let you sell bonds before maturity on the secondary market, but they charge commissions or markups that reduce your return.
- The minimum purchase through TreasuryDirect is $100 for most bonds; through a broker it varies but is often lower in dollar terms because you can buy partial shares.
- Setting up a TreasuryDirect account takes a few days and requires a Social Security number, bank account, and valid ID; opening a brokerage account is usually faster.
Buying directly from the U.S. Treasury through TreasuryDirect
TreasuryDirect is the official platform run by the U.S. Department of the Treasury. You open an account at treasurydirect.gov, link a bank account, and buy bonds with no fees or commissions. The Treasury holds your bonds in an electronic account and sends interest payments directly to your bank.
The main trade-off is flexibility. Most bonds bought through TreasuryDirect must be held for at least one year, and if you sell before five years, you lose the last three months of interest as a penalty. Treasury bills (short-term bonds) can be held as short as four weeks, but you cannot sell them early at all—you must wait until they mature. This makes TreasuryDirect best for money you do not plan to touch.
To open an account, you need a Social Security number, a valid U.S. ID, and a U.S. bank account. The setup process takes two to three business days. Once approved, you can buy bonds when ready. The minimum purchase is $100 for most bonds, and you can add any amount above that in $1 increments.
Buying through a bank or brokerage
Banks and brokerages like Fidelity, Charles Schwab, Vanguard, and E*TRADE let you buy government bonds alongside stocks and other investments. They hold your bonds in a brokerage account and handle all the paperwork. Many offer research tools and customer service to help you choose which bonds to buy.
The cost is higher than TreasuryDirect. Banks typically charge a commission per bond purchase, ranging from $10 to $50 depending on the institution. Brokerages may charge a flat fee, a percentage of the purchase, or nothing at all—policies vary widely. Some brokerages waive fees on Treasury purchases to attract customers, so it is worth asking before you open an account.
The main advantage is the secondary market. If you need your money before the bond matures, you can sell it to another investor through the brokerage. The price you receive depends on interest rates and market conditions—you may get more or less than you paid. This flexibility costs money in the form of the bid-ask spread (the difference between what a buyer will pay and what a seller is asking), but it means your money is not locked away.
Opening a brokerage account is usually faster than TreasuryDirect, often taking one business day. Minimum purchases vary by firm and bond type, but many brokerages let you buy bonds in smaller increments than the Treasury requires.
Buying through a financial advisor or investment firm
A financial advisor can help you decide which bonds fit your overall financial plan, how much to buy, and when to sell. They may work on commission (earning money when you buy), on a flat fee, or on a percentage of assets under management. Some advisors are fiduciaries, meaning they are legally required to put your interests first; others are not.
This route is most useful if you have a large amount to invest, want personalized guidance, or are unsure how bonds fit into your broader strategy. The downside is cost—advisor fees can range from a few hundred dollars for a one-time consultation to 0.5% to 1.5% per year if they manage your money. Over time, these fees can significantly reduce your returns.
Before hiring an advisor, ask whether they are a fiduciary, what they charge, and whether they have conflicts of interest (for example, earning higher commissions on certain bond types). You can check an advisor's background and registration through the Financial Industry Regulatory Authority (FINRA) at brokercheck.finra.org.
Comparing fees and costs across routes
| Route | Purchase Fee | Selling Before Maturity | Minimum Purchase |
|---|---|---|---|
| TreasuryDirect | None | Penalty: lose last 3 months of interest (after 5 years) | $100 |
| Bank | $10–$50 per purchase | Can sell on secondary market; bid-ask spread applies | Varies; typically $1,000–$5,000 |
| Brokerage | $0–$50 per purchase (varies by firm) | Can sell on secondary market; bid-ask spread applies | Varies; some offer fractional shares |
| Financial Advisor | Commission, flat fee, or percentage of assets | Advisor handles sale; fees explore | Often $10,000 or more |
For a small purchase held to maturity, TreasuryDirect is almost always cheapest because there are no fees. For larger amounts or if you think you might need to sell early, a brokerage with low or no Treasury fees may be worth the trade-off in flexibility. A financial advisor makes sense only if the guidance is worth the cost—typically when you have a substantial amount to invest or complex financial circumstances.
How to set up each account type
TreasuryDirect: Go to treasurydirect.gov and click "Open an Account." You will need your Social Security number, a valid ID (driver's license or passport), and a U.S. bank account. The system will verify your identity and send a confirmation email within two to three business days. Once confirmed, you can log in and buy bonds when ready.
Bank or brokerage: Visit the institution's website and select "Open an Account" or "get your free guide." You will provide personal information, answer questions about your investment experience, and link a bank account for funding. Most firms complete the process within one business day. Some may ask for additional documentation if you have a complex financial situation.
Financial advisor: Search for advisors in your area through FINRA's BrokerCheck, the National Association of Personal Financial Advisors (NAPFA), or the Garrett Planning Network. Interview at least two or three advisors, ask about their fees and credentials, and request references from current clients. Once you choose an advisor, they will guide you through account setup.
Secondary market: selling bonds before maturity
If you buy a bond through a bank or brokerage and need to sell before it matures, you can list it on the secondary market—a network where investors buy and sell existing bonds. The price you receive depends on current interest rates, the bond's credit quality, and how much time is left until maturity.
When interest rates rise, existing bond prices fall (because new bonds pay higher rates). When interest rates fall, existing bond prices rise. If you sell when rates have risen since you bought, you will receive less than you paid. If rates have fallen, you may receive more. The bid-ask spread—the difference between what buyers will pay and what sellers are asking—is typically small for Treasury bonds but still reduces your proceeds.
TreasuryDirect does not offer a secondary market. If you buy a bond there and want to sell before maturity, you must transfer it to a brokerage account first, which takes several business days and may involve a fee. This is one reason TreasuryDirect works best for money you plan to hold until maturity.
Frequently Asked Questions
Can I buy government bonds with less than $100?
Through TreasuryDirect, the minimum is $100 for most bonds. Some brokerages offer fractional shares or lower minimums, but you will pay a commission or markup. If you have less than $100 to invest, a brokerage may still be an option—ask before opening an account.
What is the difference between buying a bond and buying a bond fund?
When you buy an individual bond, you own that specific debt instrument and know exactly when it matures and what you will receive. A bond fund pools money from many investors to buy a portfolio of bonds; the fund's value changes daily based on market conditions. Bond funds are more liquid (easier to sell quickly) but have ongoing management fees.
Do I pay taxes on government bond interest?
Interest from federal government bonds is taxed as ordinary income at the federal level. However, interest from Treasury bonds is exempt from state and local income taxes. Municipal bonds (issued by states and cities) are often exempt from federal tax as well. Consult a tax professional about your specific situation.
What happens if I need to sell a Treasury bond I bought through TreasuryDirect before it matures?
You must transfer the bond to a brokerage account, which takes several business days. Once there, you can sell it on the secondary market at the current price. If you sell within five years of purchase, you also lose the last three months of interest as a penalty. This is why TreasuryDirect works best for long-term holdings.
Is one route safer than another?
All government bonds carry the same credit risk—the U.S. government backs them equally. The difference is in operational safety. TreasuryDirect is backed by the federal government and has no counterparty risk. Banks and brokerages are regulated and insured by the Securities Investor Protection Corporation (SIPC) up to $500,000 per account, so your bonds are protected even if the firm fails.