TreasuryDirect: Definition, How It Works, and Benefits

Key takeaways

• TreasuryDirect is the U.S. Treasury’s online portal for buying and redeeming federal securities directly, in electronic form.
• Available securities include Treasury bills, notes, bonds, TIPS, and Series I and EE savings bonds.
• The platform eliminates broker commissions by selling new-issue Treasuries directly to investors; minimum investment is typically $100.
• Account applicants need a Social Security number or EIN, a U.S. address, and a linked checking or savings account.

What is TreasuryDirect?

TreasuryDirect is the official website through which the U.S. Department of the Treasury sells new-issue Treasury securities directly to individual and institutional investors. It provides a paperless way to buy, hold, and redeem Treasury bills, notes, bonds, Treasury Inflation-Protected Securities (TIPS), and Series I and Series EE savings bonds.

Securities available

• Treasury bills (short-term)
• Treasury notes (intermediate-term)
• Treasury bonds (long-term)
• Treasury Inflation-Protected Securities (TIPS)
• Series I savings bonds
• Series EE savings bonds

All are backed by the full faith and credit of the U.S. government.

How Treasury auctions work

Treasuries sold via TreasuryDirect are issued through auctions that establish the securities’ rates and yields. Investors may submit:

• Non-competitive bids — accept the auction-determined rate/yield; guaranteed allocation (subject to auction size).
• Competitive bids — specify the rate/yield/discount margin desired; accepted from lowest to highest until the offering is filled.

Non-competitive bidders receive the auction’s final terms. TreasuryDirect handles only new issues; previously issued (off-the-run) securities trade in secondary markets.

Opening an account

Eligible account holders include individuals, corporations, partnerships, LLCs, trusts, estates, and certain other entities. Required to open an account:
* Social Security number (or Employer Identification Number)
* U.S. mailing address
* Linked checking or savings account for fund transfers
* Email address and internet access with a secure browser

Financial professionals cannot use TreasuryDirect to buy securities on behalf of clients.

Note: You can arrange for your federal or state tax refund to be deposited directly into a TreasuryDirect account and use it to purchase securities.

Benefits

• No brokerage commissions or dealer markups for new-issue Treasuries.
• Direct, paperless ownership and electronic transfers to/from bank accounts.
• Low minimums (often $100), making Treasuries accessible to many investors.
• Wide range of maturities and inflation-protected options.

Special considerations

• TreasuryDirect sells only new issues; once a new issue is released, prior issues of the same maturity are typically available only in the secondary market.
• Institutions and individuals can hold securities in TreasuryDirect, but cannot execute broker-mediated purchases through the system.
• Regular auction schedules mean some maturities (for example, the 52-week bill) are reissued on a set cadence, and older issues become off-the-run.

Summary

TreasuryDirect is a cost-effective, secure way to buy U.S. Treasury securities directly from the government. It’s well suited for investors seeking low-cost, government-backed fixed-income investments with electronic recordkeeping and easy transfers to bank accounts.