You can buy U.S. Treasury bonds directly from the federal government through TreasuryDirect, or through a bank or brokerage firm
The cheapest route is TreasuryDirect, the U.S. Department of the Treasury's online platform. You create an account, fund it from your bank, and purchase bonds with no fees or middleman markup. The trade-off is that TreasuryDirect has a slower, more rigid process — you can only buy during specific auction windows, and selling before maturity requires moving your bonds to a brokerage first.
If you want to buy bonds outside the auction schedule, or sell them quickly before they mature, you'll use a brokerage account at a bank or investment firm. These firms buy bonds from the secondary market and sell them to you, which means you pay a markup or commission. The speed and flexibility cost money, but you get when ready access and can sell anytime during market hours.
Both routes are legitimate. Which one makes sense depends on whether you plan to hold the bonds until maturity, how much you're investing, and whether you need to move quickly.
Key Takeaways
- TreasuryDirect charges no fees and has no markup, but you can only buy during Treasury auction windows and must wait days for settlement.
- Brokerages let you buy bonds anytime and sell them before maturity, but they charge a commission or spread that reduces your return.
- You need a bank account to fund either route, and TreasuryDirect requires a Social Security number or employer ID number.
- Treasury bonds bought through any channel are backed by the U.S. government and are not insured through FDIC or SIPC — the government's obligation is the may provide.
How to open and use TreasuryDirect
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 verify your identity by checking your credit file — this is not a hard inquiry and does not affect your credit score. Once approved, you link your bank account and can fund your TreasuryDirect account.
Bonds are sold at scheduled auctions. The Treasury announces auction dates on its website, and you place your bid during the window — usually a few days before the auction closes. You can bid "noncompetitively," which means you accept whatever interest rate the auction sets. Most individual investors bid this way. After the auction closes, settlement happens a few days later, and the bonds appear in your account.
If you want to sell before maturity, you must transfer the bonds to a brokerage account first. This takes a few days and may involve a small fee from the brokerage. Once transferred, you can sell on the secondary market during normal trading hours.
Buying through a bank or brokerage
Open an account at any bank or brokerage that offers bond trading — this includes large firms like Fidelity, Charles Schwab, and Vanguard, as well as traditional banks. The process is similar to opening any investment account: you provide identification, Social Security number, and bank details for funding.
Once your account is open, you can search for Treasury bonds by maturity date and interest rate. The firm will show you the price, which includes their markup or commission. You place an order, and the trade settles in one or two business days. You can sell anytime the bond market is open, Monday through Friday during market hours.
Commissions and spreads vary widely. Some brokerages charge a flat fee per trade ($5 to $25 is common). Others use a "spread" — they buy the bond for one price and sell it to you for a slightly higher price, pocketing the difference. Ask your broker what you'll pay before you buy.
The cost difference between TreasuryDirect and brokerages
On a $10,000 bond purchase, TreasuryDirect costs nothing. A brokerage might charge $10 to $25 in commission, or a spread of 0.1% to 0.5% of the purchase price — that's $10 to $50 on a $10,000 bond. Over the life of the bond, this difference compounds, especially on shorter-term bonds where the interest payment is smaller.
The math shifts if you need to sell before maturity. If you hold a bond to maturity, you get the full face value back regardless of where you bought it. If you sell early, the price depends on interest rates at the time of sale. A brokerage can sell it when ready; TreasuryDirect requires you to transfer it first, which takes time and may cost a fee. In a rising-rate environment, waiting even a few days can mean a lower sale price.
For most people holding bonds to maturity, TreasuryDirect saves money. For active traders or people who might need to sell early, a brokerage is worth the cost.
Minimum purchase amounts and bond types
TreasuryDirect has a $100 minimum per purchase and a $5 million annual limit per person. You can buy Treasury bills (short-term, under one year), Treasury notes (2 to 10 years), and Treasury bonds (20 to 30 years). You can also buy I Bonds and EE Bonds, which are savings bonds with special inflation protections — these are only sold through TreasuryDirect.
Brokerages typically have no minimum, though some firms set their own floor. You can buy the same Treasury bills, notes, and bonds as TreasuryDirect, but savings bonds are not available through brokerages.
What happens after you buy
Once your bond settles, you own it. The Treasury or the brokerage will send you interest payments on the scheduled dates — usually twice a year for Treasury notes and bonds. You can reinvest these payments, spend them, or let them sit in your account.
If you hold to maturity, you get your full purchase price back on the maturity date. If you sell early through a brokerage, you get whatever the market price is at that moment — which could be more or less than you paid, depending on interest rates.
You'll receive a 1099-INT form at tax time reporting the interest you earned. This interest is taxable at the federal level but exempt from state and local income tax.
Common reasons to choose one route over the other
| Situation | Better choice | Why |
|---|---|---|
| You plan to hold bonds until maturity | TreasuryDirect | No fees, and you don't need to sell early |
| You want to buy bonds outside auction windows | Brokerage | TreasuryDirect only sells during scheduled auctions |
| You might need to sell before maturity | Brokerage | when ready sale without transfer delays |
| You want to build a bond ladder with specific dates | Brokerage | More flexibility in choosing maturity dates |
| You're buying I Bonds or EE Bonds | TreasuryDirect | Only available through TreasuryDirect |
| You have a small amount to invest | TreasuryDirect | No minimum, no fees |
Frequently Asked Questions
Do I need a brokerage account to buy Treasury bonds?
No. TreasuryDirect is free and requires only a bank account and Social Security number. A brokerage account is optional and useful only if you want to buy outside auction windows or sell before maturity.
Can I lose money on a Treasury bond?
If you hold to maturity, you get your full purchase price back — there is no default risk because the U.S. government backs the bond. If you sell early, the price depends on interest rates. Rising rates lower bond prices, so you could sell for less than you paid. Falling rates raise prices, so you could sell for more.
What's the difference between a Treasury bond and a Treasury note?
The main difference is maturity length. Treasury notes mature in 2 to 10 years; Treasury bonds mature in 20 to 30 years. Longer bonds typically pay higher interest rates because you're lending money for a longer time. Both are bought the same way through TreasuryDirect or a brokerage.
How long does it take to get my money back if I sell a bond early?
Through a brokerage, the sale settles in one or two business days, and you can withdraw the cash to your bank account shortly after. Through TreasuryDirect, you must first transfer the bond to a brokerage, which takes a few days, then sell it, which takes another one or two days.
Are Treasury bonds insured?
No. Treasury bonds are not insured by the FDIC or SIPC because they don't need to be — they are backed by the full faith and credit of the U.S. government. This backing is considered safer than insurance.