How to Buy Treasury Bills: TreasuryDirect vs a Brokerage
Buying US Treasury bills does not have to be complicated. You can purchase them directly from the US government or through a bank, broker or dealer. Both routes provide access to short-term government securities, but the buying process, account features and options for selling before maturity differ.
The key is choosing a route that fits your needs, understanding how auctions work and knowing when your money will become available again.
1. TreasuryDirect vs a Brokerage: What's the Difference?
TreasuryDirect is the US government's official platform for buying and holding Treasury securities. A brokerage is a financial intermediary that may let you purchase bills at government auctions or buy existing securities from other investors.
| Feature | TreasuryDirect | Brokerage |
|---|---|---|
| Purchase route | New Treasury auctions | Auctions and potentially secondary-market purchases |
| Minimum purchase | $100 | Depends on the broker and transaction |
| Auction bidding | Noncompetitive only | Competitive or noncompetitive |
| Early selling | Requires transferring the security to a broker or dealer | Generally handled through the broker |
| Fees | No account-opening fee | Fees and charges depend on the provider |
| Reinvestment | Available for eligible maturing securities | Depends on broker features and available securities |
2. Check Your Eligibility First
Before opening an account, confirm that you qualify.
For an individual TreasuryDirect account, you generally need to be at least 18, have a valid Social Security number, a US address of record and a US bank account that supports Automated Clearing House (ACH) transactions. TreasuryDirect also has requirements concerning legal competence and account registration.
If you prefer a brokerage, check its own account-opening requirements, residency restrictions, minimums and fees. Eligibility varies by provider.
You can review the official TreasuryDirect account requirements.
3. How to Buy Treasury Bills Through TreasuryDirect
Once your account is ready, follow these steps.
Step 1: Choose your bill's maturity. Treasury bills are available in terms of 4, 6, 8, 13, 17, 26 and 52 weeks. Consider when you will need your money.
Step 2: Check upcoming auctions. Visit the official auction announcements page to identify the bill you want and its auction and issue dates.
Step 3: Submit your purchase request. Sign in to TreasuryDirect, select BuyDirect, choose the bill and enter your purchase amount. The minimum is $100, with additional purchases in $100 increments.
Step 4: Fund your purchase. Ensure your linked bank account has sufficient funds for the payment.
Step 5: Check the auction result. Your final purchase price and return are determined through the auction. With a noncompetitive bid, you accept the yield determined at auction rather than specifying the yield you want.
TreasuryDirect provides the official instructions for buying Treasury marketable securities.
4. How to Buy Through a Brokerage
A brokerage may be convenient if you already have an investment account or want the flexibility to trade existing Treasury bills.
First, confirm that your broker offers Treasury bills and review its charges. Then:
- 1Open or sign in to your eligible brokerage account.
- 2Find the Treasury auction or fixed-income section.
- 3Choose a bill maturity and review the purchase terms.
- 4Enter your order amount and select the available auction or secondary-market option.
- 5Review the price, yield, fees and settlement details before confirming.
At auction, a noncompetitive bid accepts the auction's resulting yield. A competitive bid specifies the yield you are willing to accept and may receive a partial allocation or none if your bid is not accepted.
In the secondary market, you purchase an existing bill at its current market price. Its remaining maturity and yield may differ from those of a newly issued bill.
5. What Happens at Maturity?
Treasury bills generally pay no periodic interest. Instead, they are usually purchased at a discount and redeemed at face value when they mature.
For example, if you pay $980 for a bill with a $1,000 face value, you receive $1,000 at maturity. Your $20 difference is your return before taxes and applicable costs.
You can generally choose to receive the proceeds at maturity or reinvest them in another eligible bill. TreasuryDirect allows investors to schedule reinvestments for eligible securities when placing an order. Check the available settings and funding arrangements before relying on automatic reinvestment.
Remember that reinvesting means purchasing another security at the yield available at that future auction, which may be higher or lower than your original yield.
6. Can You Sell Before Maturity?
Yes, but the process depends on where you hold the bill.
If your bill is held at a brokerage, contact the broker to sell it on the secondary market. The selling price may be higher or lower than your purchase price, and transaction fees may apply.
If you bought the bill through TreasuryDirect, you cannot sell it directly from that account. You must transfer it to a bank, broker or dealer first. TreasuryDirect generally requires a 45-calendar-day holding period before an eligible newly purchased marketable security can be transferred or sold. This restriction means a four-week bill bought there cannot be sold through an external broker before maturity.
Read TreasuryDirect's selling instructions before buying if early access may matter to you.
The Bottom Line
TreasuryDirect offers a direct route to buying Treasury bills, while a brokerage may offer auction access, secondary-market trading and greater flexibility for selling before maturity.
Before choosing, compare eligibility, fees, maturity dates, reinvestment options and early-sale restrictions. If you know when you need your money and understand how each route works, you can make a more informed decision about buying US Treasury bills.
