For investors who want to purchase U.S. Treasuries, or who want to learn more about how the government manages its debt, TreasuryDirect is the place to do so.
In the past, you would purchase Treasuries by going to a bank. You are now able to buy them from the website, banks, brokers, or dealers. The TreasuryDirect website allows you to buy bonds directly from the government and have the money drawn from a source of your choice.
What Types of Treasuries Does TreasuryDirect Offer?
There are many types of securities available via TreasuryDirect:
- Treasury bills (maturities of one year and less)
- Treasury notes (maturities of two, three, five, seven, and 10 years)
- Treasury bonds (maturities greater than 10 years)
- Treasury Inflation-Protected Securities (TIPS)
- Floating Rate Notes
- Series I Savings Bonds
- Series EE Savings Bonds
Because selling bonds before they mature is harder and more costly compared with other aspects of the service, TreasuryDirect is best for those who plan to hold their bonds until maturity, which is the time when the principal and last coupon payment are made.
You can buy only new issues on TreasuryDirect, so once a bond is trading in the secondary market, it is no longer available for purchase. As a result, those who plan to trade Treasuries might want to seek out an option better suited to their needs.
STRIPS, zero-coupon Treasury securities whose interest and principal payments have been separated from each other, are not available for purchase on the site.
How Does TreasuryDirect Work?
The website describes the service as follows:
TreasuryDirect is the first and only financial services website that lets you buy and redeem securities directly from the U.S. Department of the Treasury in paperless electronic form. You enjoy the flexibility of managing your savings portfolio online as your needs and financial circumstances change—all the time knowing your money is backed by the full faith of the U.S. government.
One of the main attributes of the site is its ease of use. It makes buying Treasuries simple, and it presents information clearly and in a way that is easy to find. From start to finish, the process of signing up and arranging to purchase government bonds takes only about 10 to 15 minutes.
The website requires you to input basic info, such as your Social Security number, e-mail address, and bank account number and routing number. The purpose of the banking information is to allow electronic transfer between your bank account and your TreasuryDirect account. You will also set up a password and select and answer security questions, among other security measures.
Once you are signed up, you can choose among a number of ways to buy Treasuries, fund your purchases, and receive principal and interest payments. One option for buying savings bonds is the payroll savings plan, which lets you make recurring purchases of electronic savings bonds by having money taken from each paycheck and sent to your TreasuryDirect account.
A Source of Information on Government Bonds
In addition to providing a way to buy government securities, the TreasuryDirect website is also full of information that can help you learn more about the Treasury market and the debt operations of the federal government.
Among the useful features are the Treasury auction schedule and the results of recent auctions. The site also contains an explanation of the auction process, savings bond rates, calculators, and links to other government websites regarding the economy. It has a section for kids, too.
The Balance does not provide tax, investment, or financial services and advice. The information is presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal.