Skip to main content

How Can You Buy Treasury Bonds Directly Without a Broker?

Most people who want to invest in U.S. government bonds assume they need a brokerage account—a middleman who charges fees to buy and sell bonds on their behalf. But the U.S. Treasury offers a direct channel: TreasuryDirect, a federal program that lets you buy Treasury bills, notes, bonds, and I-Bonds directly from the government with zero fees.

For savers—especially those who want to preserve capital, earn modest returns, and avoid stock market volatility—TreasuryDirect is one of the most underutilized tools in personal finance. You skip the broker fees, you buy at the same price institutions pay, and you get the security of the full faith and credit of the United States government backing your investment.

I-Bonds (Savings Bonds) are particularly valuable for inflation hedging. When inflation rises, your I-Bond's interest rate rises with it automatically. During the 2022–2023 inflation surge, I-Bonds paid over 5% interest while traditional savings accounts paid 0.01%. That difference is not trivial.

Quick definition: TreasuryDirect is a federal program allowing individuals to buy U.S. Treasury securities and Savings Bonds directly from the government at no cost. I-Bonds are inflation-indexed savings bonds that pay interest rates tied to inflation, providing protection against rising prices.

Key takeaways​

  • TreasuryDirect eliminates broker fees (typically $10–$25 per bond purchase) by letting you buy directly from the Treasury
  • I-Bonds adjust rates twice per year based on inflation, making them an effective hedge when prices are rising
  • Minimum investment is low: $25 for I-Bonds, and Treasury securities start at $100
  • All interest is exempt from state and local taxes, though federal tax applies (except I-Bonds used for education)
  • Penalties apply if you cash I-Bonds before 5 years, but Treasury notes and bonds have no early-withdrawal cost
  • Interest rates vary: I-Bonds currently (2025) pay composite rates determined by inflation; Treasury notes and bonds pay fixed rates set at auction

Understanding the Treasury Ecosystem​

The U.S. Treasury issues several types of securities. Understanding the differences is crucial before you buy.

Treasury Bills (T-Bills)​

T-Bills are short-term IOUs that mature in 4, 8, 13, or 26 weeks. The Treasury sells them at a discount to face value, and you receive the full face value at maturity. The difference is your interest.

Example: You buy a 13-week T-Bill for $9,950. In 13 weeks, you receive $10,000. Your earnings: $50.

Advantages:

  • Very safe (backed by U.S. government)
  • Highly liquid (you can sell before maturity)
  • Minimal interest-rate risk (short maturity)

Disadvantages:

  • Interest rates are low (currently 4–5% annually, but this fluctuates)
  • Frequent reinvestment needed (you're constantly renewing expired T-Bills)

Use case: T-Bills are excellent for emergency funds that need to stay liquid but earn more than a savings account. Instead of holding $10,000 in a 0.5% savings account, use T-Bills earning 4–5%.

Treasury Notes (T-Notes)​

T-Notes mature in 2, 3, 5, 7, or 10 years. They pay fixed interest twice per year and return your principal at maturity.

Example: You buy a $10,000, 5-year Treasury Note paying 4.5% interest. Every six months, you receive $225 (half of the annual 4.5%). In 5 years, you receive your $10,000 back, plus the final interest payment.

Advantages:

  • Predictable income (you know your exact payment schedule)
  • Longer maturity reduces reinvestment risk compared to T-Bills
  • You can sell before maturity (though price fluctuates with interest rates)

Disadvantages:

  • Interest-rate risk (if you sell before maturity and rates have risen, you'll get less than you paid)
  • Longer lock-up period means less flexibility

Use case: T-Notes are appropriate for goals with a defined timeline (saving for a house down payment in 5 years, education costs in 10 years).

Treasury Bonds (T-Bonds)​

T-Bonds are long-term Treasury securities maturing in 20 or 30 years. They work similarly to T-Notes—fixed interest paid twice per year—but lock you in for decades.

Advantages:

  • Highest yields among Treasuries (longer maturity = higher interest rate)
  • Suitable for long-term retirement savings

Disadvantages:

  • Significant interest-rate risk (bond prices fall sharply if rates rise)
  • Extreme lack of liquidity for a 30-year security
  • Rarely attractive unless you're planning to hold to maturity

Use case: Retirement accounts (where you plan to hold securities long-term) or extreme risk-aversion scenarios.

I-Bonds (Inflation Savings Bonds)​

I-Bonds are the most interesting Treasury security for inflation protection. Unlike T-Notes and T-Bonds (which pay fixed rates), I-Bonds pay a composite rate consisting of two parts:

  1. Fixed rate: Set when you buy, never changes. Currently 1.30% annually (as of May 2025).
  2. Inflation rate: Adjusts every 6 months based on the Consumer Price Index (CPI).

How it works: Your composite rate = Fixed rate + Inflation rate (announced twice per year in May and November).

Example timeline:

  • May 2025: You buy an I-Bond. The composite rate is 1.30% (fixed) + 3.24% (current inflation rate) = 4.54% annually.
  • November 2025: The Treasury announces new inflation data. Inflation has slowed to 2.8%. Your new composite rate is 1.30% + 2.8% = 4.10% annually for the next 6 months.
  • May 2026: Inflation has spiked to 4.2%. Your new composite rate is 1.30% + 4.2% = 5.50%.

Your I-Bond's interest rate adjusts automatically, so it always reflects current inflation.

Advantages:

  • Automatic inflation protection (as inflation rises, your I-Bond's return rises)
  • Very safe (backed by U.S. government)
  • All interest is exempt from state and local taxes
  • Interest is exempt from federal taxes if used for education
  • Can be purchased with as little as $25

Disadvantages:

  • Cannot be cashed before 1 year (you're locked in for at least 12 months)
  • Penalty if cashed before 5 years (you forfeit the last 3 months of interest)
  • Interest rates are lower than other fixed-income investments during low-inflation periods
  • The fixed rate component (1.30%) is historically very low, providing minimal return if inflation stays near zero

Use case: I-Bonds are ideal for inflation-protected savings earmarked for goals 5+ years away (education, down payment, retirement).

Setting Up TreasuryDirect​

Opening a TreasuryDirect account is straightforward and entirely online.

Step-by-Step Setup​

  1. Visit TreasuryDirect.gov and click "Open an Account."

  2. Create login credentials: Email and password. You'll use this to log in every time you buy or manage securities.

  3. Verify your identity: The website asks for your Social Security number, birth date, and address. It verifies this information against federal records.

  4. Link a bank account: You must provide a checking or savings account number and routing number. This is where your interest payments and maturity proceeds will be deposited.

  5. Fund your account (optional at signup): You can fund your account immediately or wait until you're ready to buy.

Total time: 10–15 minutes. No fees to open the account.

Buying Your First Security​

Once your account is active, buying securities is simple.

To buy an I-Bond:

  1. Log in to TreasuryDirect
  2. Click "Buy Direct"
  3. Select "Savings Bonds" > "Series I Bond"
  4. Choose the purchase amount ($25–$10,000 per calendar year)
  5. Review the terms and confirm
  6. The money is deducted from your linked bank account

The I-Bond is issued immediately; you don't need to wait for anything to arrive. You own the security digitally.

To buy a Treasury Note or Bill:

  1. Log in to TreasuryDirect
  2. Click "Buy Direct"
  3. Select the security type (2-Year Note, 5-Year Note, 13-Week Bill, etc.)
  4. Choose competitive or noncompetitive bid (noncompetitive is simpler for individual buyers—you accept the Treasury's determined rate)
  5. Choose the amount ($100 minimum)
  6. Confirm

Auctions happen on a regular schedule. If you submit a bid on Tuesday, the Treasury might auction that security on Thursday, determining the rate the day before settlement. You receive confirmation of your purchase, and the security settles (money is deducted from your account) a few days later.

Real timeline: From opening account to owning your first I-Bond = 20–30 minutes.

Comparing TreasuryDirect to Brokers​

Why use TreasuryDirect instead of a brokerage like Fidelity or Charles Schwab?

Cost Comparison​

Scenario: Buy a $10,000 Treasury Note.

  • TreasuryDirect: $0 fee. You pay $10,000; you own $10,000 face value.
  • Broker: $10–$25 fee. You pay $10,010–$10,025; you own $10,000 face value.

Over a year, that fee seems trivial. But if you regularly invest in Treasuries, the savings compound. A person who buys $50,000 in Treasuries annually would save $500–$1,250 per year using TreasuryDirect versus a broker.

Convenience Comparison​

TreasuryDirect advantages:

  • No fees
  • Direct access to primary market (you buy at auction prices)
  • Automatic interest deposits

Broker advantages:

  • Can buy and sell bonds any time (TreasuryDirect has limited trading)
  • Older I-Bonds can only be held in TreasuryDirect (you can't sell them elsewhere without transferring)
  • More sophisticated tools for timing investments
  • Can hold multiple custodial accounts (helpful for families)

Decision rule: If you're buying Treasuries to hold to maturity and want to avoid fees, use TreasuryDirect. If you want flexibility to trade bonds, use a broker.

Real-World Examples: TreasuryDirect Strategies​

Example 1: The I-Bond Ladder for Education​

Michelle opens a TreasuryDirect account in 2025 when her daughter is 13. She buys $10,000 in I-Bonds using the Series I Education Savings Program. (I-Bonds purchased for qualified education expenses can have interest exempt from federal tax—this requires specific paperwork and can't be changed later.)

She repeats this purchase every year for the next 5 years (2025–2030), buying $10,000 annually. By the time her daughter is 18 (2030), Michelle owns $60,000 in I-Bonds (some at the 2025 rates, some at 2026 rates, etc.).

The bonds are now mature (5+ years old), so Michelle can cash them with no penalty. She uses the proceeds to pay for tuition. Because the bonds were purchased for qualified education expenses, all interest is exempt from federal income tax. Total tax savings: ~$2,400–$3,600 (depending on the composite rates).

Cost with a broker: $150–$250 in fees (15–25 purchases × $10–$15 per purchase). Cost with TreasuryDirect: $0.

Example 2: The Emergency Fund Alternative​

David keeps $15,000 in a traditional savings account earning 0.5% ($75 per year). His accountant suggests using TreasuryDirect instead.

David opens TreasuryDirect and buys 13-week Treasury Bills totaling $15,000. The current auction rate is 5.10%.

After 13 weeks, the T-Bills mature, and David receives $15,000 + interest (~$190). He immediately reinvests in new 13-week T-Bills at the new auction rate.

Over one year, David's emergency fund earns approximately $820 (if rates stay stable) versus $75 in a savings account. That's $745 in extra interest—tax-free at the state level, federally taxed, but still significantly better than the savings account.

Downside: David's emergency fund is locked up for 13 weeks at a time. If he needs $10,000 in an emergency after 2 weeks, he'd have to contact his bank and withdraw it (or sell the T-Bills early, though TreasuryDirect doesn't allow quick selling—you'd have to wait until maturity).

Better strategy: Keep $5,000 in a high-yield savings account for true emergencies, and $15,000 in T-Bills for stability.

Example 3: The Inflation Hedge Miss​

James bought $20,000 in I-Bonds in March 2020, just as inflation was collapsing. At the time, composite rates were 2.36%. He thought he was making a good decision.

Fast forward to May 2022: Inflation exploded to over 8%. James's I-Bond rate adjusted to 1.30% (fixed) + 9.62% (inflation) = 10.92%—suddenly very attractive.

But James needed money in January 2022 to cover a medical expense. He cashed his I-Bonds just 21 months after buying them. Because he cashed before 5 years, he forfeited 3 months of interest. His effective return was much lower. He paid 22% of his total interest as a penalty.

Lesson: I-Bonds require a true 5-year horizon for optimal results. The 1-year lockup and 5-year penalty are real constraints.

Managing Your TreasuryDirect Account​

Tracking Your Holdings​

Your TreasuryDirect account dashboard shows all holdings: face value, purchase price, current value, interest earned, and maturity date. It's simple and clean—much more transparent than brokerage dashboards.

Monthly reconciliation isn't necessary (the Treasury's system is very accurate), but annual reviews are helpful:

  • Check that maturing securities are being rolled over (if you want that) or cashed (if you need the money)
  • Verify that interest is being deposited to your bank account correctly
  • Monitor I-Bond rates and plan new purchases if rates are attractive

Reinvestment Planning​

When a T-Bill, T-Note, or T-Bond matures, the Treasury automatically deposits the principal back to your linked bank account. If you want to reinvest, you must log back into TreasuryDirect and buy again.

I-Bonds don't mature (they technically mature at 30 years, but you can hold them far longer). You can cash them anytime after 1 year (with the 5-year penalty caveat).

Pro tip: Set calendar reminders 3 months before maturity dates so you don't forget to reinvest or plan for how you'll use the money.

Transferring or Selling​

TreasuryDirect allows limited selling through its "Sell Direct" system (only for notes, bonds, and bills—not I-Bonds). However, selling creates complexity and potential losses (if interest rates have risen, your bond is worth less). Most people simply hold to maturity.

If you want to sell I-Bonds or need more flexibility, you'd have to move to a broker (which involves a transfer process) or hold until maturity.

Common Mistakes with TreasuryDirect​

Mistake 1: Buying I-Bonds Without a 5-Year Horizon​

I-Bonds have a 1-year lockup and a 5-year penalty (forfeiting last 3 months of interest). If you buy an I-Bond expecting to need the money in 2 years, you'll lose ~1.5% of your investment to the penalty. Only buy I-Bonds if you genuinely won't need the money for 5+ years.

Mistake 2: Ignoring the Rate-Setting Schedule​

I-Bond rates change every May and November. If you're planning to buy I-Bonds, timing matters. Before May 2025, rates might be 4.5%. If you wait until after May 2025 (when new inflation data is released), rates might be 3.2%. Checking the Treasury's announcement before you buy (or scheduling your purchase for right after a rate announcement) can make a significant difference.

Mistake 3: Forgetting About Maturity Dates​

You buy a 5-year Treasury Note and forget about it. Five years later, the note matures, and the money sits in your TreasuryDirect account earning $0 per year. Set reminders for maturity dates so you can decide whether to reinvest or use the money.

Mistake 4: Mixing Up Auction Dates and Settlement Dates​

When you buy a Treasury security through TreasuryDirect, you submit a bid on one day (say, Tuesday). The auction happens 1–2 days later, and the rate is set. Settlement happens a few days after the auction (money is deducted from your account). It's not instant; plan accordingly.

FAQ​

Can I buy Treasury securities through my brokerage instead of TreasuryDirect?​

Yes. Any brokerage (Fidelity, Schwab, etc.) will sell you Treasury securities. The downside is fees ($10–$25 per purchase). For buy-and-hold investors, TreasuryDirect eliminates these fees entirely.

Are Treasury securities insured like bank deposits?​

No. They're not insured by the FDIC. But they're backed by the full faith and credit of the U.S. government. In practical terms, that's safer than FDIC insurance (U.S. default is far less likely than a bank failure). That said, if interest rates rise significantly, the market value of your bond falls. So while you won't lose principal if you hold to maturity, you could lose money if you sell before maturity and rates have risen.

What if I need to cash an I-Bond before the 1-year anniversary?​

You can't. I-Bonds are completely illiquid for the first year. Plan accordingly.

Can I use TreasuryDirect for a child's investment account?​

TreasuryDirect allows custodial accounts (accounts for minors). You open the account using the child's Social Security number but manage it as the custodian until the child reaches age of majority.

Are Treasury securities taxed?​

Interest from Treasury securities is:

  • Exempt from state and local income tax (this is a huge advantage if you live in a high-tax state like California or New York)
  • Subject to federal income tax
  • Exempt from federal tax if used for education (only for I-Bonds, with special enrollment)

This tax treatment makes Treasuries especially valuable for residents of high-tax states.

What happens if I default on a loan using Treasury securities as collateral?​

The lender can seize the securities. This is rare for individual investors, but it's a risk if you borrow against your Treasury holdings.

Summary​

TreasuryDirect allows you to buy U.S. Treasury securities and I-Bonds directly from the federal government with zero fees. Treasury Bills, Notes, and Bonds provide safe, fixed-rate income backed by the U.S. government. I-Bonds offer inflation protection by adjusting rates twice per year based on the Consumer Price Index. All Treasury interest is exempt from state and local taxes, providing significant tax savings for residents of high-tax states. Opening a TreasuryDirect account takes 15 minutes and requires only a valid ID, Social Security number, and a linked bank account. While I-Bonds require a 1-year lockup and impose a penalty for redemption before 5 years, they're an effective hedge against inflation for long-term savings goals. For buy-and-hold investors, TreasuryDirect's zero-fee structure and direct access to Treasury auctions make it superior to brokerage-based Treasury purchasing.

Next​

→ Bank bonus stacking