How to Buy Treasury Bonds, Notes and Bills

U.S. Treasury bonds, notes and bills are relatively safe investments. Learn how to buy them directly from the government or through brokers, banks and exchange-traded funds.
Alieza Durana
By Alieza Durana 
Updated
Edited by Chris Davis

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Nerdy takeaways
  • Treasury bonds, notes and bills are low-risk investments issued by the U.S. government.

  • 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.

MORE LIKE THISInvestingBonds

Treasurys are low-risk securities issued by the U.S. government that pay a fixed rate of interest. As a Treasury bond, note or bill investor, you essentially make a loan to the government, and it pays you back with interest over time.

Here are some Treasury bond basics: 

  • They're issued in 20- or 30-year terms. 

  • They can be purchased in increments of $100.

  • Treasury bonds pay interest semiannually (every six months) until the end of the term.

  • They're low-risk, long-term investments guaranteed by the U.S. government. 

The current rate for 20-year and 30-year bonds is 4.75%

U.S. Treasury. Treasury Bonds. Accessed Dec 20, 2023.

Treasury notes and bills are shorter-term U.S. government bonds. Treasury notes mature in two to 10 years and Treasury bills in four weeks to a year.

Where to buy Treasury bonds, notes or bills 

While you can buy Treasurys like T-bonds directly from the source — the U.S. government — one of the most common ways people add them to their portfolio is by investing in Treasury exchange-traded funds or mutual funds through bank, brokerage or retirement accounts. There is no difference between the Treasury bonds, notes and bills in terms of where to buy them – all can be bought through brokerage accounts or TreasuryDirect.

From a broker or a bank 

Exchange-traded funds and mutual funds are ways to buy government bonds in bulk on a brokerage platform. An exchange-traded fund, or ETF, is a basket of investments — such as stocks or bonds — from which you can buy as many or as few shares as you like. Treasury ETFs invest in U.S. Treasury securities, and they are low-cost investments that can be bought and sold like any ETF. Like ETFs, mutual funds are another way investors pool resources in order to get exposure to many securities without having to purchase or manage them.

According to Nicholas Juhle, a certified financial analyst and chief investment officer at Greenleaf Trust, ETFs and mutual funds offer the convenience of owning a number of Treasury bonds that mature at different times and having them managed for you. 

“There's a system in place. When the bonds mature, they're rolling that back into new Treasurys for you all the time,” he says.

To understand what the ETF or mutual fund you’re interested in contains, Juhle recommends checking its prospectus. 

“Each ETF or mutual fund is going to have a prospectus that describes exactly what can and cannot be held,” Juhle says. For example, this might include whether the fund holds 80% T-bonds or 100% T-bonds.

Top 5 Treasury ETFs by AUM

Ticker

Treasury ETF

Assets under Management (AUM) ($MM)

TLT

iShares 20+ Year Treasury Bond ETF

$51,155

BIL

SPDR Bloomberg 1-3 Month T-Bill ETF

$33,712

EIF

iShares 7-10 Year Treasury Bond ETF

$26,420

SHY

iShares 1-3 Year Treasury Bond ETF

$25,667

GOVT

iShares U.S. Treasury Bond ETF

$22,477

» Learn more: What is an ETF? 

Directly from the U.S. government through the TreasuryDirect website

If you want to bypass brokerages and buy direct from the government, be sure you have these three pieces of information handy if you do: a taxpayer identification number or Social Security number, a U.S. address, and a checking or savings account to link for payment. 

Here's how to buy government bonds from TreasuryDirect:

  1. Go to TreasuryDirect.gov (or skip to step five if you already have an account).

  2. Choose the type of account you’re selecting: an individual account, business or organizational account, or estate and trust account.

  3. Provide personal information including: a taxpayer identification number, or TIN; a U.S. address; and a bank account.

  4. Create a password and username to open a TreasuryDirect account.

  5. Once your account has been confirmed, open the account and select the Buy Direct tab.

  6. Specify the security you want — in this case Treasury bonds — and the amount you want to buy.   

  7. Select buy.

When the bond matures, the yield lands directly and automatically in your account. 

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Important Treasury Bond Terms

Key terms

Definitions and examples

Annual coupon payment

The total investment interest payment over the course of 1 year.

Coupon payment frequency

How often investment interest payments are made. T-bond coupon payments pay every 6 months until maturity.

Discount price

The price of the bond if it falls below face value.

Face value

The price of the bond if held to maturity.

Interest rate

The amount a lender charges a borrower to loan them money. The interest rates for T-bonds as of December 2023 were around 4%.

Price

What investors will pay for a (Treasury) bond, which is affected by the economic environment.

Years to maturity

T-bonds mature in 20 or 30 years.

Yield to maturity

The total investment return if a bond is held to maturity.

Frequently asked questions

Treasury bonds are not the same as U.S. savings bonds. While both are U.S. debt securities, a savings bond is a different type of loan to the U.S. government sold in two series: I and EE. And unlike Treasury bonds, savings bonds cannot be bought or sold on secondary markets.

Using a brokerage or bank is the only way to trade a Treasury before its maturity date. Treasurys must be traded outside of TreasuryDirect through a bank, brokerage or dealer by selling to investors looking to buy.

If purchased from TreasuryDirect, you can sell your Treasury bond early in the bond market as long as you've held it for at least 45 days. However, this rule does not apply to T-bonds bought on the secondary market.

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