Key takeaways
– TreasuryDirect is the U.S. Treasury’s online portal for buying and holding Treasury securities directly, in electronic (paperless) form.
– Available securities include Treasury bills, notes, bonds, Treasury Inflation-Protected Securities (TIPS), and Series I and EE savings bonds.
– The system removes banks/brokers as middlemen (no commissions), has a $100 minimum for marketable issues, and only sells new Treasury issues (on-the-run securities).
– To open an account you must have an SSN or EIN, a U.S. address, a U.S. checking or savings account for transfers, and an email address; many entity types can open accounts (individuals, trusts, corporations, estates, etc.).
Sources: Investopedia summary and TreasuryDirect pages (see References).
What TreasuryDirect is (and isn’t)
– It is the official Treasury website and portal to buy, hold, and redeem Treasury-issued securities directly from the U.S. government in electronic form.
– It is the only channel to purchase new Treasury issues directly from the Treasury (paperless).
– It does not replace brokers for secondary-market trading. TreasuryDirect is focused on initial issuance and holding; secondary-market transactions are handled outside the TreasuryDirect platform.
Which securities you can buy
– Treasury bills (short-term, discount instruments)
– Treasury notes (2–10 year maturities)
– Treasury bonds (long-term maturities)
– Treasury Inflation-Protected Securities (TIPS)
– Series I savings bonds and Series EE savings bonds
All securities are backed by the full faith and credit of the U.S. government.
(For detail pages on each security type, see TreasuryDirect resources listed below.)
How Treasury auctions work — practical overview
– New marketable Treasury securities are sold at regularly scheduled auctions. The auction determines the security’s yield, interest rate, or discount.
– Bidding options:
• Non-competitive bid: you agree to accept the auction result; you are guaranteed to receive the security in the amount you request (good for most individual investors).
• Competitive bid: you specify the yield or rate you will accept; allocation is uncertain and competitive bidders may receive none if the bid is too high.
– Allocation order: the Treasury first fills all non-competitive bids, then accepts competitive bids from lowest to highest yield until the issue amount is exhausted. All successful bidders receive the highest accepted yield (single-price method).
– Minimum purchase: $100 for many marketable Treasury securities (check the auction notice for specific minimums).
Sources: Treasury auction and securities pages.
Step-by-step: How to open a TreasuryDirect account
1. Check eligibility and documents
• Required: Social Security Number (SSN) for individuals or Employer Identification Number (EIN) for entities, U.S. mailing address, a U.S. checking or savings account (to fund purchases and receive redemptions), an email address, and a secure web browser and internet connection.
• Eligible account holders include: individuals, corporations, partnerships, LLCs, estates, trusts, guardianships, and certain other entities. (Confirm eligibility for your entity type.)
2. Go to TreasuryDirect.gov and select “Open an Account” (or equivalent link).
3. Complete the online form with personal/entity information, SSN/EIN, U.S. address, and contact email.
4. Provide or link your U.S. bank account information for ACH transfers (the Treasury debits/credits this account for purchases/redemptions).
5. Choose account security options (password, security questions, and multi-factor protections if offered).
6. Verify and activate the account using any confirmation steps indicated by TreasuryDirect (email confirmation and/or identity verification).
Practical tip: Carefully record your account credentials and follow TreasuryDirect’s guidance for secure passwords and device use.
Step-by-step: How to buy securities in TreasuryDirect
1. Log in to your TreasuryDirect account.
2. Select “BuyDirect” or the Buy option.
3. Choose the security type and the upcoming auction (Treasury posts auction schedules).
4. Select bid type:
• For most retail investors, choose a non-competitive bid (you will receive the auction rate).
• If you understand market yields, you may place a competitive bid (higher complexity and risk).
5. Enter the dollar amount to purchase (observe the $100 minimum for many marketable issues).
6. Confirm the linked bank account from which funds will be debited on settlement date.
7. Review and submit your order. TreasuryDirect will show confirmation and settlement details.
8. On issuance date, the Treasury will debit your linked bank account and credit the security to your TreasuryDirect account.
Notes:
– Savings bonds (Series I, EE) are purchased directly via set-price purchases on TreasuryDirect (they are not auctioned).
– You can schedule purchases for future auctions if you wish to plan recurring buys.
Managing securities in TreasuryDirect (practical steps)
– Holdings: view your securities and their details in the “ManageDirect” or Holdings page.
– Interest payments: for marketable notes and bonds, interest is paid to your linked bank account on scheduled coupon dates (or accrued in the account depending on product).
– Maturity/redemption:
• Marketable securities: at maturity the principal is credited to your linked bank account or rolled into another allowed purchase if you set up a reinvestment instruction.
• Savings bonds: redeem them via the TreasuryDirect interface once eligible for redemption (Series I and EE have minimum holding periods and possible early redemption penalties for very short-term redemptions).
– Automatic reinvestment: TreasuryDirect offers limited reinvestment and rollover options (confirm options available for the security type you hold).
– Use tax refund to buy Treasuries: you may direct an IRS or state tax refund into your TreasuryDirect account and use those funds to purchase securities (see TreasuryDirect guidance on linking tax refund deposits).
What if you need to sell before maturity?
– TreasuryDirect does not operate as a broker-dealer for secondary-market trading. If you want to sell a marketable Treasury security before maturity, you generally must transfer the security from TreasuryDirect to a broker-dealer (a financial institution that participates in secondary-market trading), and the broker will execute the sale on the market.
– Check TreasuryDirect’s current procedures and any transfer forms or broker requirements before initiating a transfer.
Costs, taxes, and account features
– Fees and commissions: TreasuryDirect purchases and redemptions of marketable Treasuries and savings bonds are conducted without broker commissions—TreasuryDirect itself does not charge purchase commissions for most transactions.
– Taxes: interest from Treasury securities is subject to federal income tax but generally exempt from state and local income taxes (check current tax rules and consult a tax professional).
– Paperless holdings: accounts and securities are held electronically; TreasuryDirect can issue some securities as gifts and supports beneficiary designations for estate planning.
– Account convenience: direct access to primary issuance (on-the-run securities) is a benefit; however, older off-the-run securities are available only in the secondary market (via brokers).
Important limitations and special considerations
– Only new issues (“on-the-run”) are sold on TreasuryDirect. Off-the-run Treasuries (older issues) trade in the secondary market and are not purchasable on TreasuryDirect.
– Financial professionals cannot use TreasuryDirect to buy securities on behalf of clients; purchases must be made by the named account holder.
– A U.S. mailing address is required for account registration.
– Minimum investment in most marketable issues is $100, but always check auction-specific minimums.
– If you plan to actively trade Treasuries in the secondary market, you may prefer to use a broker instead of TreasuryDirect.
– For estate, trust, or institutional accounts, review TreasuryDirect’s entity-specific requirements and documentation needs.
Practical checklist before you start
– Have your SSN or EIN ready.
– Confirm a U.S. mailing address and U.S. bank account that accepts ACH transfers.
– Prepare an email address and a secure browser/device for account setup.
– Decide whether you will place non-competitive bids (recommended for most individuals) or attempt competitive bidding.
– If you expect to redeem before maturity, research brokerage transfer procedures and timing.
Where to learn more / official resources
– TreasuryDirect (official U.S. Treasury site) — account setup, auction schedules, detailed product pages:
• Frequently Asked Questions; Setting Up an Account; The Basics of Treasury Securities; Treasury Bills; Treasury Notes; Treasury Bonds; TIPS; Series I and EE Savings Bonds; Using Your Tax Refund for TreasuryDirect. (TreasuryDirect.gov)
– Investopedia summary of TreasuryDirect (background and practical overview)
References
– Investopedia. “What Is TreasuryDirect?” (source page provided).
– U.S. Department of the Treasury, TreasuryDirect: Frequently Asked Questions; Setting Up an Account; The Basics of Treasury Securities; Treasury Bills; Treasury Notes; Treasury Bonds; Series I Savings Bonds; Series EE Savings Bonds; TIPS; Using Your Tax Refund for TreasuryDirect. (TreasuryDirect.gov; referenced documents accessed Aug. 13, 2021 in the original source list).
Editor’s note: The following topics are reserved for upcoming updates and will be expanded with detailed examples and datasets.