How to Buy Treasury Bonds and Bills (2024)

There are several ways to buy Treasuries. For many people, TreasuryDirect is a good option; however, retirement savers and investors who already have brokerage accounts are often better off buying bonds on the secondary market or with exchange-traded funds (ETFs). Treasury money market accounts also offer more convenience and liquidity than TreasuryDirect.

Key Takeaways

  • TreasuryDirect allows investors to buy Treasury bonds and bills directly from the U.S. government.
  • It is not possible to open IRAs or other tax-advantaged accounts at TreasuryDirect.
  • Investors must transfer bonds from TreasuryDirect to banks or brokerages if they want to sell them before the maturity date.
  • Some of the other ways to buy treasuries include ETFs, money market accounts, and the secondary market.
  • When you buy bond ETFs or bonds on the secondary market through a broker, you can hold them in an IRA or another tax-free retirement account.

TreasuryDirect

TreasuryDirect is an electronic marketplace and online account system where investors can buy, hold, and redeem eligible book-entry Treasury securities. The TreasuryDirect system is run by the U.S. Department of the Treasury.

Individual investors with TreasuryDirect accounts can participate in Treasury debt auctions and purchase debt securities including U.S. savings bonds directly from the U.S. Treasury. Opening an account takes about 10 minutes. TreasuryDirect offers a simple and relatively inexpensive way to buy government debt securities.

While you can't open tax-advantaged retirement accounts at TreasuryDirect, you can do so at banks and brokers.

Investors must have a valid Social Security number (or taxpayer identification number) and a U.S. address. They also need an email address, a web browser that supports 128-bit encryption, and a checking or savings account.

Bear in mind that you can't redeem Treasuries purchased on TreasuryDirect before maturity. If you decide that you need or want to sell them, you must transfer your securities to a broker and then sell them on the secondary market through that broker.

How to Purchase Treasuries on TreasuryDirect

Eligible securities for TreasuryDirect purchases include Treasury bills, Treasury notes, Treasury bonds, Floating Rate Notes (FRNs), and Treasury Inflation-Protected Securities (TIPS). Buying is simple. Once you log on, you can access the BuyDirect system. You'll be prompted to select the owner of the security.

Many investors buy Treasuries for gifts and charitable transfers. You'll also choose the product type or term, source of funds, and the amount to purchase. You can schedule the purchase whenever you like and how often you like, although dates are subject to availability. The system will allow you to review your order before submitting it.

Securities are generally issued to your account within two business days of the purchase date for savings bonds or within one week of the auction date for bills, notes, bonds, FRNs, and TIPS.

Transfers into TreasuryDirect are permissible and start at the outgoing firm. That is unlike the ACAT transfer process for broker-to-broker transfers, which is initiated at the receiving firm.

Once T-bills have matured, their proceeds are easy to reinvest. Simply select the "schedule repeat purchases" option and then choose the number of repeat purchases and their frequency after you have finished entering the registration and purchase information for your transaction. Maturing notes and bonds may also be reinvested.

Your account is subject to several restrictions. The minimum purchase amount for savings bonds is $25 per person. Above that, savings bonds are sold in penny increments up to $10,000 per year. For T-bills, notes, bonds, and TIPS, an investor may submit noncompetitive bids from $100 up to $10 million for each security type in $100 increments.

How to Participate in Treasury Auctions

TreasuryDirect account holders can participate in Treasury auctions held on a regular schedule throughout the year. In 2022, there were 384 public auctions for $15 trillion in Treasury debt securities.

The first step in the auction process is the announcement of upcoming auctions, generally four to five business days before the auction date. The announcement discloses the date of the auction, the amount of a security to be auctioned, its issue and maturity dates, terms and conditions, eligible participants, and deadlines for competitive and noncompetitive bids.

Noncompetitive bids guarantee the bidder will receive the desired amount of the auctioned security at a price set by competitive bidders in the auction. Noncompetitive bids are limited to $10 million. Competitive bids specify the expecteddiscount rate, yield, or spread for a security and may only be filled in part, or not at all. Most individual investors make noncompetitive bids, while competitive bids typically come from financial institutions.

The second step of the auction process is the auction itself. On the auction date, the Treasury reviews all bids received for compliance with applicable rules. Compliant noncompetitive bids must be received by the close time stated in the auction announcement.

The final step of the auction process is the issuance of the securities. Securities are deposited to investor accounts, and payment is delivered to the Treasury.

Buying Treasuries at Auction: TreasuryDirect vs. Brokers

You can buy Treasuries at auction from online brokers for the same price as at TreasuryDirect. Some brokers may charge a fee for this service whereas others do not. In addition, there is a difference in the settlement process. TreasuryDirect takes your payment on the day the securities are issued, which is usually several days after the auction date. Some online brokers, on the other hand, may require payment before the issue date.

Finally, you can instruct TreasuryDirect to handle the rollover of funds from a maturing security into the purchase of another. Some brokers offer such automatic rollovers but you should check with yours for the details, including any fee charged for the service.

Transferring Treasuries Through TreasuryDirect

Treasuries can be held until they mature or sold before that time. To sell Treasuries held in your account at TreasuryDirect, first, you must transfer them to an account you have with a bank, broker, or dealer, and then place an order to sell them.

A Transfer Request Form must be completed online or on paper to transfer Treasuries out of your TreasuryDirect account. This form should indicate the correct routing number, bank name, and any special handling instructions for your transfer.

To redeem a savings bond electronically, click the "Redeem" button found near the bottom of the "Current Holdings" page. You will need to specify whether it is a partial or full redemption and furnish the payment destination where you want the redemption proceeds deposited.

The redeem button will not appear on the holdings page if there are no bonds eligible for online redemption in your account. You can redeem paper bonds at most local financial institutions, such as your bank. That is the easiest and quickest way to get access to your money.

Other Ways to Buy Treasuries

Some of the other ways to buy Treasuries include ETFs, money market accounts, and the secondary market.

Buying Treasuries as ETFs

It is possible to buy Treasuries through ETFs at most brokerages. ETFs are bought and sold like stocks, and many qualify for commission-free trades. Investors can choose from government bond ETFs focused on short-term Treasuries, long-term Treasuries, TIPS, and FRNs.

Treasury ETFs can be held in IRAs and other tax-advantaged retirement accounts.

Many Treasury ETFs have modest fees. Some of the largest funds offer expense ratios as low as 0.15% annually, making them a very affordable investment option.

Buying Treasury Bills Through the Money Market

You can also buy Treasury bills by investing in a Treasury money market mutual fund. Such funds typically have low fees and low yields limited by rates on the shortest-term Treasury bills.

The U.S. Treasury's Office of Financial Research tracks the investments of U.S. money market mutual funds in the aggregate and by financial institution.

Buying Treasuries in the Secondary Market

Buying Treasuries in the secondary market is easier than most people think. Many brokerages give their customers full access to the bond market, but fees vary. If buying and selling Treasuries is important to you, many of the best brokerages offer free trading for Treasury bonds.

Even better, you completely avoid the annual fees of ETFs and the money market. Buying standard U.S. government bonds is easier than buying most other bonds because all you need to know is the time to maturity. TIPS can be trickier to trade.

When you buy bonds on the secondary market through a broker, you can hold them in an IRA or another tax-free retirement account. Buying on the secondary market also makes it easier to sell Treasury bonds at a later date.

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How Do You Buy and Sell Short Term Treasury Bills?

You can buy short-term Treasury bills on TreasuryDirect, the U.S. government's portal for buying U.S. Treasuries. Short-term Treasury bills can also be bought and sold through a bank or broker. If you do not wish to hold your Treasuries until maturity, the only way to sell them is through a bank or broker.

How Many Treasury Bills Can You Buy?

The maximum amount of Treasury bills that you can buy in a single auction is $10 million if the bids are noncompetitive, or 35% of the offering amount for competitive bids.

How Do You Buy T-Bills Online?

You can buy T-bills online directly from the U.S. government at TreasuryDirect. Alternatively, you can also buy T-bills at auction or on the secondary market through a bank or broker. Bills are issued weekly through an auction bidding process.

How Do You Buy Canadian Treasury Bills?

You can buy Canadian Treasury bills from a financial institution or from a broker. The minimum investment for purchasing a Canadian Treasury bill is CA$1,000.

The Bottom Line

Treasuries are a great way to diversify your investment portfolio and reduce its risk since U.S. Treasuries are backed by the full faith and credit of the U.S. government. Treasuries are an important part of a retirement portfolio for many savers because they are liquid, low-risk, and provide an income stream.

How to Buy Treasury Bonds and Bills (2024)

FAQs

How do I buy Treasury bonds and bills? ›

Individuals, organizations, fiduciaries, and corporate investors may buy Treasury securities through a bank, broker, or dealer. With a bank, broker, or dealer, you may bid for Treasury marketable securities non-competitively or competitively, but not both, for the same auction.

How to buy Treasury bills for dummies? ›

For newly issued T-bills, the minimum purchase is $100 and the securities are sold in increments of $100. New issues are sold at auction, and to participate, you must sign up with your broker or at TreasuryDirect.gov. Auctions happen every four weeks for 52-week T-bills and weekly for shorter-term T-bills.

How much is a $100 savings bond worth after 20 years? ›

How to get the most value from your savings bonds
Face ValuePurchase Amount20-Year Value (Purchased May 2000)
$50 Bond$100$109.52
$100 Bond$200$219.04
$500 Bond$400$547.60
$1,000 Bond$800$1,095.20

How much money do you need to buy a US Treasury bond? ›

Treasury bond auctions happen four times a year: in February, May, August and November. You must purchase at least $100 worth of Treasury bonds and they are sold in $100 increments.

Can I buy Treasury bills myself? ›

You can buy them from the government directly, and many buy them through a brokerage, retirement or bank account. Treasury owners pay federal taxes on the investment interest earned but no state or local taxes.

What is the safest way to buy Treasury bills? ›

Buy Treasury bills through a broker or financial advisor

Similar to banks, brokers and advisors can help you buy T-bills, but they may also provide additional services like financial advice or portfolio management.

How much does a $1000 T bill cost? ›

To calculate the price, take 180 days and multiply by 1.5 to get 270. Then, divide by 360 to get 0.75, and subtract 100 minus 0.75. The answer is 99.25. Because you're buying a $1,000 Treasury bill instead of one for $100, multiply 99.25 by 10 to get the final price of $992.50.

Why not to buy Treasury bills? ›

Taxes: Treasury bills are exempt from state and local taxes but still subject to federal income taxes. That makes them less attractive holdings for taxable accounts. Investors in higher tax brackets might want to consider short-term municipal securities instead.

How much do 1 year Treasury bills pay? ›

1 Year Treasury Rate is at 5.16%, compared to 5.17% the previous market day and 4.78% last year. This is higher than the long term average of 2.95%. The 1 Year Treasury Rate is the yield received for investing in a US government issued treasury security that has a maturity of 1 year.

What is a $1000 savings bond worth? ›

Total PriceTotal ValueYTD Interest
$1,000.00$2,094.00$89.60

Do savings bonds double every 7 years? ›

Series EE savings bonds are a low-risk way to save money. They earn interest regularly for 30 years (or until you cash them if you do that before 30 years). For EE bonds you buy now, we guarantee that the bond will double in value in 20 years, even if we have to add money at 20 years to make that happen.

How long does it take for a $1000 dollar savings bond to mature? ›

They're available to be cashed in after a single year, though there's a penalty for cashing them in within the first five years. Otherwise, you can keep savings bonds until they fully mature, which is generally 30 years. These days, you can only purchase electronic bonds, but you can still cash in paper bonds.

Do banks charge to buy T-bills? ›

When you buy T-bills through your bank, it may charge you additional fees and expenses such as sales commissions or transaction charges. These extra costs can add up over time and eat into your returns on your investment.

Do you pay taxes on Treasury bonds? ›

Interest from Treasuries is generally taxable at the federal level, but not at the state level. Interest from munis is generally exempt from federal taxes, and if you live in the state where the bond was issued, the interest may also be exempt from state taxes.

What is the easiest way to buy Treasuries? ›

You can purchase Treasury bonds from the government by visiting TreasuryDirect.gov. The minimum amount of money you need to purchase a bond is $100, and you'll have to have your Social Security number or taxpayer identification number handy.

Is it better to buy Treasury bills or bonds? ›

Both Treasury bonds and Treasury bills are low-risk debt securities issued by the federal government. T-bonds are designed for long-term investing, while T-bills have much shorter maturity periods. Both can help diversify your investment portfolio while shielding you from state and local taxes.

What is the easiest way to buy Treasury bills? ›

Buy T-Bills in a Brokerage Account

For clients of large firms like Fidelity, Vanguard, and Charles Schwab, placing an order through your broker may be easier than opening a separate TreasuryDirect account. These firms charge no fees for T-bills.

What is a 1 year T bill paying today? ›

1 Year Treasury Rate is at 5.14%, compared to 5.16% the previous market day and 4.76% last year. This is higher than the long term average of 2.95%. The 1 Year Treasury Rate is the yield received for investing in a US government issued treasury security that has a maturity of 1 year.

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