To buy Treasury bonds, you have two paths: open a free account at TreasuryDirect.gov and buy directly from the U.S. government, or use a bank or brokerage account you already have. Either way, the minimum purchase is $100, you buy in $100 increments, and your order is placed as a non-competitive bid at a Treasury auction. The bond pays a fixed interest rate every six months for 20 or 30 years, then returns your full principal at maturity.1TreasuryDirect. Treasury Bonds
The Two Ways to Buy
TreasuryDirect is the government’s own platform. It charges no fees for buying, holding, or redeeming bonds, and every order goes straight to auction.2TreasuryDirect. Where You Hold Your Securities The trade-off is that TreasuryDirect has no secondary marketplace, so selling before maturity requires transferring the bond out first.
A brokerage keeps Treasury bonds alongside your other investments and makes it easy to sell before maturity by listing on the secondary market. Fees vary. Some firms charge a flat transaction fee, others build a small markup into the price.
If you plan to hold to maturity and want the cheapest path, use TreasuryDirect. If you might sell early, or you already manage everything through a broker, buy there.
Opening a TreasuryDirect Account
Signup is online and takes about ten minutes. You’ll need your Social Security Number, a U.S. physical address, an email address, and the routing and account numbers for a U.S. bank account that accepts ACH debits and credits.
Go to TreasuryDirect.gov and start a new account. Choose “Individual” as the account type, enter your personal and banking details, create a password, and set your security questions. Treasury emails you an account number once you finish. That number plus your password is your permanent login.3TreasuryDirect. TreasuryDirect FAQ
Individual accounts are usually approved instantly. Entity accounts (trusts, estates, LLCs, sole proprietorships) require a notarized FS Form 5444 mailed to Treasury Retail Securities Services in Minneapolis before the account activates.4TreasuryDirect. TreasuryDirect Account Authorization
Placing an Order on TreasuryDirect
Log in and complete the multi-factor authentication prompt. From the dashboard, click “BuyDirect,” pick “Treasury Bonds” from the list of securities, and choose the 20-year or 30-year term.
Enter the dollar amount you want to invest, in $100 increments starting at $100. The screen shows the next available auction date. Select the linked bank account for the debit, confirm the summary, and submit. Ownership is recorded electronically; there are no paper certificates.1TreasuryDirect. Treasury Bonds
How the Auction and Settlement Work
You aren’t buying a bond at a set price. Treasury bonds are sold through auctions, and retail investors place non-competitive bids, meaning you agree in advance to accept whatever rate the auction produces. Large institutional bidders compete on yield, and the final accepted yield becomes the rate paid to every buyer, including you. Non-competitive bids are guaranteed to be filled.
Auctions run monthly. The 30-year bond is auctioned in the first or second week of the month; the 20-year bond is auctioned in the second half. Initial offerings happen quarterly in February, May, August, and November, with reopenings the other eight months.5TreasuryDirect. When Auctions Happen (Schedules)
Your bank isn’t debited on auction day. Settlement, when the money leaves your account and the bond appears in your holdings, happens a few business days later. Thirty-year bonds usually settle two to four business days after the auction. Twenty-year bonds can take six to ten business days because settlement is often pinned to the last business day of the month. Keep enough in your linked account to cover the debit on the settlement date, not just the auction date.6U.S. Department of the Treasury. Tentative Auction Schedule of U.S. Treasury Securities
Minimums, Increments, and Fees
Bonds start at $100 and go up in $100 increments. There’s no need to buy a full $1,000 face value bond. Non-competitive bids are capped at $10 million per auction, well beyond what any retail buyer needs to worry about.1TreasuryDirect. Treasury Bonds
TreasuryDirect charges no fees at any stage.2TreasuryDirect. Where You Hold Your Securities Brokerage fees vary by firm.
Buying Through a Brokerage
In a brokerage account, look for the “Fixed Income” or “Bonds” section. You’ll typically see two options. New issues are bought at government auction; the broker submits a non-competitive bid on your behalf, and you receive the same yield as everyone else. Secondary market purchases are previously issued bonds trading between investors. You search by CUSIP, the nine-character identifier assigned to each security, and place an order at the current market price or set a limit.7FINRA. Bond Page
Cost is the trade-off. Some brokers charge a flat fee per bond, others build a markup into the price. Selling later is much easier from a brokerage, since you can list on the secondary market from your account with no transfer paperwork.
Selling Before Maturity
You aren’t locked in for 20 or 30 years. You can sell on the secondary market, but the price depends on where interest rates stand when you sell. If rates have risen since you bought, your bond’s market value has fallen: a buyer won’t pay full price for your 3% bond when new bonds offer 4%. If rates have dropped, your bond is worth more. The government guarantees full principal at maturity. It does not guarantee the market price on an early sale.8U.S. Securities and Exchange Commission. When Interest Rates Go Up, Prices of Fixed-Rate Bonds Fall
TreasuryDirect has no secondary marketplace. To sell a bond held there, first transfer it to a bank, broker, or dealer using FS Form 5511 from the “ManageDirect” tab, then sell through that account. You cannot transfer a bond for at least 45 calendar days after its issue date.9eCFR. 31 CFR Part 363 Subpart F – Marketable Treasury Securities10TreasuryDirect. Transferring From One System To Another
Taxes on the Interest
Interest from Treasury bonds is subject to federal income tax and exempt from state and local income tax by federal statute.11Office of the Law Revision Counsel. 31 USC 3124 – Exemption From Taxation Each January, TreasuryDirect posts a consolidated 1099 inside your account under “ManageDirect”; brokerage-held bonds get a 1099 from the broker.12TreasuryDirect. Tax Forms and Tax Withholding You can elect to withhold up to 50% of interest earnings for federal taxes. Selling above what you paid produces a capital gain; selling below can produce a capital loss.
After You Buy
Interest payments arrive automatically every six months, deposited into your linked bank account. In TreasuryDirect, “Current Holdings” shows each bond’s face value, rate, next payment date, and maturity date.1TreasuryDirect. Treasury Bonds
At maturity you can take the cash or reinvest. A scheduled reinvestment rolls the proceeds into the next available bond of the same type and term, and can be scheduled one time. You can set it up or cancel it up to four business days before the bond matures. If no matching bond is available on the maturity date, the reinvestment cancels automatically and the money goes to your bank.13TreasuryDirect. User Guide Sections 211 Through 220 Keep your banking information current either way, since an outdated routing or account number can delay both interest payments and the maturity payout.