How to buy Treasury bills, bonds & I bonds on TreasuryDirect

TreasuryDirect.gov is the only platform in the United States where an individual investor can purchase securities issued by the US Treasury without any intermediary, without any commission, and without any markup. The platform is operated by the Bureau of the Fiscal Service, the arm of the Treasury Department responsible for managing the federal government’s debt, and it gives retail investors direct access to the same auction process that large institutional buyers use to purchase newly issued Treasury securities. Every T-bill, T-note, T-bond, TIPS, floating rate note, and Series I savings bond available to the American public can be purchased through TreasuryDirect, and the platform charges nothing — no account fees, no transaction fees, no custody fees, no annual maintenance charges.

The platform is also, to put it honestly, one of the most frustrating user experiences in US government technology. The interface has not been meaningfully redesigned since the mid-2000s. The security model requires a virtual keyboard, a personalized image, and a security phrase that together create a login process slower and more error-prone than any modern brokerage. Account recovery after a lockout can take weeks and requires physical mail. The system does not support joint accounts in the way brokerages do, does not integrate with portfolio tracking tools, and provides limited reporting for tax purposes compared to what Fidelity, Schwab, or Vanguard generate automatically.

Understanding both sides of that equation — the genuine structural advantages and the real operational friction — is essential for deciding whether TreasuryDirect is the right channel for your Treasury purchases, or whether buying the same securities through a brokerage is the better path. This guide covers the full landscape: what the platform is, how to set up an account, how each type of Treasury security works, how the auction process operates, what auto-roll reinvestment does and does not do, how TreasuryDirect compares with brokerage purchases, the tax treatment that makes Treasuries attractive in the first place, and the common mistakes that lock people out of their accounts or cause them to miss auctions.

How to buy Treasuries on TreasuryDirect, in short: open a free account at TreasuryDirect.gov with your Social Security number, link a US bank account in your name, and go to BuyDirect. Pick the security type and term — a T-bill, note, bond, TIPS, or I bond — then place a noncompetitive bid before the auction deadline. On the issue date, TreasuryDirect debits your bank account and the security settles into your holdings. The minimum is $100 for marketable securities and $25 for electronic I bonds.

What TreasuryDirect actually is

TreasuryDirect is a web-based platform maintained by the US Department of the Treasury’s Bureau of the Fiscal Service. It replaced the older Treasury Direct system (two words, no camel case) and the Legacy Treasury Direct system, consolidating all retail Treasury purchasing into a single online platform. The system went live in its current form in 2002 for savings bonds and expanded to marketable securities (T-bills, T-notes, T-bonds, TIPS) starting in 2005.

The platform serves two distinct functions. First, it is the exclusive retail channel for purchasing Series I and Series EE savings bonds in electronic form. You cannot buy electronic I-bonds or EE bonds anywhere else — not at a bank, not at a brokerage, not through a financial advisor. Second, it is one of several channels for purchasing marketable Treasury securities at auction. The same T-bills and T-notes available on TreasuryDirect are also available through competitive auction bids at major brokerages, but TreasuryDirect offers the securities with zero transaction cost and zero spread, which matters for investors purchasing in smaller increments.

Securities purchased on TreasuryDirect are held in book-entry form in an account registered to the individual investor. There is no physical certificate, no custodian bank, no intermediary. The investor’s name is recorded directly in the Treasury’s own system as the owner of the security. This is a meaningfully different ownership structure from holding Treasury securities through a brokerage, where the securities are held in the brokerage’s name at the Depository Trust Company and credited to the investor’s account — a structure called “street name” holding that adds a layer of intermediation.

Setting up a TreasuryDirect account

Opening a TreasuryDirect account requires several pieces of information and a verification process that is more involved than opening a typical brokerage account.

What you need before starting. A valid Social Security Number or Individual Taxpayer Identification Number, a US bank account with routing and account numbers for linking (the account must be in the applicant’s name), an email address, and a US mailing address. TreasuryDirect accounts are available to US citizens, US residents with valid SSNs, and certain entities (trusts, estates, corporations, partnerships), each with their own account type.

The application process. The online application asks for personal identifying information (name, SSN, date of birth, address), banking information for linking, and contact information. You will choose a password, a security question, and a personalized security image and phrase that will appear at each login to confirm you are on the legitimate TreasuryDirect site rather than a phishing replica. The system also requires you to set up what it calls an “account authorization” — a process where TreasuryDirect sends a one-time code to verify your identity. For new accounts, this authorization step sometimes requires a verification letter sent by physical mail to your registered address, which can add 7-10 business days before the account is fully functional.

The virtual keyboard. TreasuryDirect requires you to enter your password using an on-screen virtual keyboard — clicking characters with your mouse rather than typing them. The stated purpose is to defeat keylogger malware that might capture typed passwords. In practice, the virtual keyboard makes the login process substantially slower and more error-prone than a standard password field, and it is the single most common source of frustration that users report. Combined with the session timeout (which logs you out after a relatively short period of inactivity), the virtual keyboard creates an experience that feels archaic compared to the fingerprint or face recognition login at a modern brokerage app.

Linking your bank account. The bank account you link during account setup is the account from which purchase funds will be debited and to which redemption proceeds will be credited. You can change the linked bank account later, but changes require a verification process. TreasuryDirect does not support linking multiple bank accounts simultaneously — it operates with one linked account at a time, which is a meaningful limitation for households that manage cash across several banks.

Treasury bills: the short-term workhorse

Treasury bills are the shortest-maturity securities the US Treasury issues, and they are the product most individual investors come to TreasuryDirect to buy. T-bills are issued at a discount to their $100 par value and pay no coupon; the difference between the discounted purchase price and the $100 you receive at maturity is your interest income.

Available maturities. The Treasury issues T-bills in six standard maturities: 4-week, 8-week, 13-week, 17-week, 26-week, and 52-week. Each maturity has its own auction schedule, and the Treasury publishes the auction calendar well in advance on its website. The 4-week and 8-week bills are auctioned weekly (typically on Tuesdays), the 13-week and 26-week bills are auctioned weekly (typically on Mondays), the 17-week bill is auctioned every four weeks, and the 52-week bill is auctioned every four weeks on a different cycle.

How discount pricing works. If you purchase a 26-week T-bill and the auction determines a discount rate of 4.80%, your purchase price will be approximately $97.57 per $100 of face value. At the end of the 26-week term, you receive $100. The $2.43 difference is your interest income for the period. The TreasuryDirect system handles this arithmetic automatically — you specify the face value you want to purchase (minimum $100, in $100 increments), and the system debits the discounted amount from your linked bank account after the auction. A few days later, the Treasury refunds the small difference between the amount initially debited (which may be estimated before the auction) and the actual discounted price determined by the auction.

Non-competitive versus competitive bids. Individual investors on TreasuryDirect submit non-competitive bids, which means you are agreeing to accept whatever yield the auction produces. You are guaranteed to receive the full amount of securities you requested. Competitive bids — where the bidder specifies a minimum yield they will accept — are available only through brokerages and are used by institutional investors. For retail investors, the non-competitive bid is the correct choice: you get the market-clearing yield determined by the institutional auction without any risk of being shut out.

The auction and settlement timeline. When you schedule a T-bill purchase on TreasuryDirect, you specify the auction date and the face value amount. On auction day, the Treasury conducts the auction and determines the discount rate. Settlement occurs on the issue date, typically one business day after the auction for T-bills. On the issue date, TreasuryDirect debits the discounted purchase price from your linked bank account. At maturity, the full par value ($100 per $100 of face value) is either credited to your linked bank account or rolled into a new purchase if you have set up auto-reinvestment.

For a deeper comparison of how T-bill yields stack up against high-yield savings accounts and money market funds after taxes, see the T-bills versus HYSA versus money market funds analysis.

Treasury notes and Treasury bonds: the medium and long end

Treasury notes and Treasury bonds are the coupon-bearing securities that fill the middle and long portions of the Treasury yield curve. Unlike T-bills, which are sold at a discount and pay no coupon, notes and bonds are typically sold at or near par value and pay a fixed coupon every six months until maturity.

Treasury notes are issued in maturities of 2, 3, 5, 7, and 10 years. The 2-year and 5-year notes are auctioned monthly. The 3-year note is auctioned monthly. The 7-year note is auctioned monthly. The 10-year note — the benchmark security whose yield is the most-cited interest rate in global finance, the rate that drives mortgage pricing, corporate bond spreads, and equity valuation models — is auctioned monthly with a mid-month auction and a month-end reopening in most cycles.

Treasury bonds are issued in 20-year and 30-year maturities. The 20-year bond is auctioned monthly. The 30-year bond is auctioned monthly in a cycle that alternates between new issues and reopenings of existing issues. These are long-duration instruments with substantial interest rate risk — a 30-year bond purchased at par can lose 20% or more of its market value if long-term rates rise by 1 percentage point, though the loss is only realized if you sell before maturity.

How the coupon works. When you purchase a 10-year note with a 4.25% coupon, you receive $2.125 per $100 of face value every six months for ten years, plus the return of your $100 at maturity. The coupon rate is set at auction based on the yield that clears the market, rounded to the nearest one-eighth of a percentage point. If the auction clears at a yield slightly different from the coupon, the purchase price adjusts slightly above or below par to make the effective yield match the auction-clearing yield. On TreasuryDirect, these coupon payments are deposited automatically into your linked bank account on each semi-annual payment date.

When notes and bonds make sense on TreasuryDirect. The primary reason to buy notes or bonds directly on TreasuryDirect rather than through a brokerage is cost — TreasuryDirect charges nothing, while some brokerages charge a small markup on Treasury purchases (typically $1 per $1,000 of face value or less at the major discount brokers). For small purchases, the brokerage markup is negligible. For larger purchases or for investors who want the structural simplicity of holding securities directly at the Treasury with no intermediary, TreasuryDirect offers a clean path. The trade-off is that selling a note or bond before maturity requires transferring it to a brokerage first — a paper process built around FS Form 5511 with a bank-certified signature and postal mail, measured in weeks rather than days — friction that does not exist when the securities are already held at a brokerage.

TIPS: Treasury Inflation-Protected Securities

Treasury Inflation-Protected Securities are a distinct category of Treasury notes and bonds whose principal adjusts with the Consumer Price Index for All Urban Consumers (CPI-U). TIPS are designed to protect the investor against inflation by ensuring that both the principal and the coupon payments grow in real terms as the price level rises.

How the inflation adjustment works. When you purchase a TIPS at par ($100), the Treasury adjusts the principal value of the bond semi-annually based on the change in the CPI-U. If the CPI-U rises 3% over a year, the adjusted principal becomes $103. The coupon rate (set at auction and fixed for the life of the bond) is then applied to the adjusted principal rather than the original par value. A TIPS with a 1.5% coupon and an inflation-adjusted principal of $103 pays $1.545 per year ($103 times 1.5%) rather than the $1.50 it would pay on the original $100. At maturity, you receive the greater of the inflation-adjusted principal or the original par value — the floor at par protects against the edge case of cumulative deflation over the bond’s life driving the adjusted principal below $100.

Available maturities. The Treasury issues TIPS in 5-year, 10-year, and 30-year maturities. Auctions occur less frequently than for nominal T-notes and T-bonds — typically every few months for each maturity, with reopenings of existing issues between new auctions.

The real yield concept. The yield quoted on a TIPS is a real yield — the return above inflation. When a 10-year TIPS auctions at a real yield of 2.0%, the investor is guaranteed a 2.0% annual return above whatever inflation turns out to be over the next ten years. Comparing this real yield to the nominal yield on a conventional 10-year note gives you the market’s implied inflation expectation, a figure known as the breakeven inflation rate. If the 10-year nominal note yields 4.3% and the 10-year TIPS yields 2.0%, the breakeven inflation rate is approximately 2.3% — the market is pricing in 2.3% average annual inflation over the next decade.

TIPS on TreasuryDirect versus at a brokerage. The same considerations apply as for nominal notes and bonds: TreasuryDirect charges nothing, but secondary market sales require a transfer. For TIPS specifically, the tax reporting is more complex because the annual inflation adjustment to principal is taxable as ordinary income in the year it accrues (even though you do not receive the cash until maturity), creating what is called “phantom income.” Brokerages handle this reporting on 1099-OID forms; TreasuryDirect provides the information but in a less integrated format that may require more manual work at tax time.

Series I savings bonds: the inflation-protected savings vehicle

Series I savings bonds occupy a unique position in the TreasuryDirect product lineup. Unlike T-bills, T-notes, T-bonds, and TIPS — which are marketable securities that can be traded on the secondary market — I-bonds are non-marketable savings bonds that can only be purchased, held, and redeemed through TreasuryDirect.

The two-component interest rate. The I-bond rate has two parts: a fixed rate set at purchase and locked for the bond’s 30-year life, and a variable inflation rate that adjusts every six months based on changes in the CPI-U. The Treasury announces both components on May 1 and November 1 each year. The fixed rate for new purchases is permanent — a bond purchased during a high-fixed-rate window (1.0% or higher in recent cycles) keeps that fixed rate for 30 years. The inflation component resets semi-annually for all outstanding bonds.

Purchase limits. Each individual with a Social Security number can purchase up to $10,000 of electronic I-bonds per calendar year through TreasuryDirect. (A paper-bond option that let filers direct up to $5,000 of a federal income tax refund into I-bonds via IRS Form 8888 was discontinued effective January 1, 2025; TreasuryDirect is now the only purchase channel.) A married couple can each purchase $10,000 electronically for a combined $20,000. These limits make I-bonds a useful supplement to a savings allocation but not the primary vehicle for large cash holdings.

The lockout and penalty. I-bonds cannot be redeemed for the first 12 months after purchase, period. Redemptions between 12 months and 5 years forfeit the last three months of interest. After 5 years, redemptions are at full accrued value with no penalty. The one-year lockout means I-bonds are not a substitute for an emergency fund — that role requires same-week liquidity that I-bonds cannot provide.

Tax treatment. I-bond interest is exempt from state and local income taxes (like all Treasury securities) and can be federally tax-deferred until redemption or until the bond reaches its 30-year final maturity. There is an additional federal tax exclusion available for I-bond interest used to pay qualified higher education expenses, subject to income limits. For a comprehensive walkthrough of the I-bond mechanics, including the composite rate formula and optimal purchase timing, see the Series I savings bonds guide.

The TreasuryDirect auction process step by step

Purchasing a marketable security on TreasuryDirect follows a specific workflow tied to the Treasury’s auction calendar.

Step 1 — Check the auction schedule. The Treasury publishes a quarterly announcement of upcoming auction dates for all security types. The detailed schedule is available on TreasuryDirect under “Upcoming Auctions” and on the Treasury’s public auction results page. Each auction listing shows the security type, the term, the auction date, the issue date (when the security is issued and funds are debited), and the maturity date.

Step 2 — Submit your purchase. Log into TreasuryDirect, navigate to BuyDirect, and select the security type and term you want to purchase. Enter the face value amount (minimum $100, in $100 increments for marketable securities). For T-bills, you will see the estimated purchase price based on recent auction results, but the actual price is not determined until the auction clears. You submit a non-competitive bid, which guarantees you will receive the securities at whatever yield the auction produces.

Step 3 — Auction day. The Treasury conducts the auction, accepting competitive bids from institutional investors that set the market-clearing yield. Your non-competitive bid is filled at that yield. After the auction, TreasuryDirect displays the results in your account — the discount rate (for T-bills), the coupon rate and price (for notes and bonds), and the actual dollar amount that will be debited from your bank account.

Step 4 — Settlement and issue. On the issue date, TreasuryDirect debits the purchase amount from your linked bank account via ACH. The security appears in your account holdings. For T-bills, if the initial hold amount placed on your bank account was slightly more than the actual discounted price, the difference is refunded within a few days.

Step 5 — Maturity or coupon payments. For T-bills, the par value is deposited into your linked bank account at maturity (or reinvested if auto-roll is enabled). For notes and bonds, coupon payments are deposited semi-annually. For TIPS, the inflation-adjusted coupon is deposited semi-annually and the inflation-adjusted principal is returned at maturity.

Auto-roll reinvestment: set it and mostly forget it

The auto-roll feature on TreasuryDirect allows you to automatically reinvest the proceeds of a maturing security into a new security of the same type and term at the next available auction. This is the closest thing TreasuryDirect offers to a “set it and forget it” Treasury ladder.

How to set it up. When you purchase a security, TreasuryDirect asks whether you want to schedule reinvestments. Bills may be scheduled for multiple consecutive reinvestments covering up to two years, while notes, bonds, and FRNs can be scheduled for only one. You can also add or modify reinvestment instructions after purchase by navigating to the security in your account holdings and editing the reinvestment settings, as long as you act more than four business days before the new auction. The full rulebook — including how the same feature works at a brokerage — is in our guide to T-bill auto-roll on TreasuryDirect vs brokers.

What auto-roll does. At maturity, TreasuryDirect automatically submits a non-competitive bid for a new security of the same type and term at the next available auction. The proceeds from the maturing security fund the purchase of the new one. If the new security’s discounted price (for T-bills) is less than the maturing proceeds, the difference is deposited to your linked bank account. If the discounted price is more (which would only happen if yields dropped substantially), TreasuryDirect debits the difference from your bank account.

Limitations to understand. Auto-roll reinvests at whatever yield the next auction produces — you are not locking in the original rate. In a falling-rate environment, each reinvestment produces a lower yield than the previous one. In a rising-rate environment, you benefit from higher yields on each roll. The reinvestment count is fixed at the time you set it up; if you want to extend or shorten the reinvestment chain, you need to modify the settings manually. And if your linked bank account has changed or has insufficient funds (in the rare case where additional funds are needed), the reinvestment can fail, and TreasuryDirect will deposit the maturing proceeds to your bank account instead.

The practical use case. Auto-roll is most valuable for investors who want continuous exposure to short-term Treasuries without manually logging in every 4, 8, 13, or 26 weeks to submit a new purchase. A common setup is to purchase 13-week T-bills with 25 reinvestments, which creates a rolling T-bill position that automatically renews for over six years. Investors who want to build a T-bill ladder — purchasing bills on different weekly schedules so that a portion matures every week — can set up multiple auto-roll chains on different auction cycles.

TreasuryDirect versus buying Treasuries through a brokerage

The same Treasury securities available on TreasuryDirect can be purchased through major brokerages — Fidelity, Schwab, and Vanguard all offer Treasury auction participation, and all three offer secondary-market Treasury purchases as well. The choice between the two channels involves trade-offs that depend on the investor’s priorities.

Advantages of TreasuryDirect. Zero cost — no commissions, no markups, no custody fees. Direct ownership — your name is on the security at the Treasury, not held in street name through a broker-dealer. No brokerage risk — even in the extremely unlikely event that a brokerage fails, your TreasuryDirect holdings are completely unaffected because they are not held at the brokerage. And TreasuryDirect is the only channel for purchasing electronic I-bonds, which are not available through any brokerage.

Advantages of a brokerage. Superior user interface — every major brokerage has a modern, mobile-friendly platform that makes TreasuryDirect look like a government website from 2005 (because it is). Secondary market access — you can sell Treasury securities on the secondary market at any time with standard T+1 settlement, without the multi-day Transfer Direct process that TreasuryDirect requires. Portfolio integration — your Treasury holdings appear alongside your stocks, ETFs, and mutual funds in a single view with integrated tax reporting. Better tax reporting — brokerages generate 1099-INT and 1099-OID forms that integrate directly with tax software, while TreasuryDirect provides the information in a format that often requires manual entry. Joint accounts — brokerages support joint accounts natively, while TreasuryDirect individual accounts are single-owner. Customer service — brokerages offer phone and chat support with reasonable wait times, while TreasuryDirect support is notoriously slow.

Cost comparison. Fidelity charges zero markup on Treasury auction purchases and a $1 per $1,000 markup on secondary-market purchases. Schwab charges zero on auction purchases for customers and a small markup on secondary-market trades. Vanguard charges zero on auction purchases with a $0-$1 per bond secondary-market charge. For most retail investors purchasing at auction, the cost difference between TreasuryDirect and a major brokerage is zero or negligible.

The practical recommendation. For investors who want I-bonds, TreasuryDirect is the only option. For investors who want marketable Treasury securities and already have a brokerage account at Fidelity, Schwab, or Vanguard, buying Treasuries through the brokerage is usually the better experience — same securities, same yields, same tax treatment, but with a modern interface, integrated reporting, and easy secondary-market liquidity. For investors who want the structural independence of holding securities directly at the Treasury with no intermediary, or who do not have a brokerage account and do not want one, TreasuryDirect delivers the securities at zero cost with the trade-off of a dated user experience.

For investors weighing these options as part of a broader retirement savings strategy, the contribution limits guide covers how Treasury holdings interact with tax-advantaged account allocations.

Tax treatment of Treasury securities

The federal and state tax treatment of Treasury securities is one of the primary reasons investors choose Treasuries over bank savings products, particularly in states with high income tax rates.

Federal taxation. Interest income from all Treasury securities — T-bills, T-notes, T-bonds, TIPS, I-bonds, and FRNs — is taxable as ordinary income at the federal level. For T-bills, the interest is the difference between the discounted purchase price and the par value received at maturity, reported in the year the bill matures. For notes and bonds, the coupon payments are reported as interest income in the year received. For TIPS, both the coupon payments and the annual inflation adjustment to principal are taxable in the year they accrue, even though the inflation-adjusted principal is not received until maturity (the phantom income issue). For I-bonds, interest can be reported annually or deferred until redemption or final maturity, at the taxpayer’s election.

State and local tax exemption. Interest income from all Treasury securities is exempt from all state and local income taxes. This is a structural feature under 31 U.S.C. Section 3124, which prohibits state and local governments from taxing obligations of the United States. The exemption is automatic — you do not need to claim it or file for it; you simply exclude Treasury interest from your state income tax return. For a California household in the 9.3% state bracket, this exemption is worth roughly 0.40 to 0.50 percentage points of effective yield compared to a fully-taxable high-yield savings account earning the same nominal rate. For a New York City resident paying both state and city income tax (combined marginal rate of 10-12% or higher), the exemption is worth even more.

Reporting. TreasuryDirect issues 1099-INT forms for interest income from all securities. The forms are available in the account each January for the prior tax year. That Treasury interest is reported in box 3 of the form, which a 1099-INT keeps separate from ordinary bank interest precisely because it is exempt from state tax; our 1099-INT box-by-box guide maps where each box lands on your return. The 1099-INT from TreasuryDirect reports the interest in the same boxes as a brokerage 1099, but the format is a PDF that may need to be manually entered into tax software rather than electronically imported. Some tax preparation software can import TreasuryDirect 1099s, but the integration is less seamless than the automatic import from major brokerages.

Common mistakes and how to avoid them

The operational quirks of TreasuryDirect create several traps that catch both new and experienced users. Knowing about them in advance eliminates most of the frustration.

Account lockout. This is the most common and most consequential problem. TreasuryDirect locks accounts after a small number of failed login attempts (typically three), and the unlock process is not a simple password reset. Depending on the lockout circumstances, you may need to call TreasuryDirect customer service (which has limited hours and long hold times), answer additional identity verification questions, or receive an unlock code by physical mail. Some users report lockouts lasting two to four weeks. The prevention: store your TreasuryDirect password in a password manager, use the virtual keyboard carefully (misclicks are common), and do not attempt multiple rapid logins if the first attempt fails — wait, verify your credentials, and try once more carefully.

Forgetting the security image or phrase. TreasuryDirect displays a personalized image and phrase on the login page to confirm you are on the real site. If you do not recognize the image or phrase (because you forgot what you selected during account setup), you may hesitate to enter your password, thinking you are on a phishing site. Record your security image and phrase in your password manager alongside your login credentials.

Missing an auction. If you intend to purchase a specific T-bill at a specific auction and do not submit your purchase order before the auction deadline (typically the day before the auction for non-competitive bids), you miss that auction and must wait for the next one. For weekly T-bill auctions this is a minor inconvenience; for less-frequent auctions (TIPS, 52-week bills, notes, bonds), missing the deadline can mean waiting several weeks. The prevention: submit your purchase order several days before the auction date, not the day before.

Assuming you can sell directly. New TreasuryDirect users sometimes purchase T-notes or T-bonds expecting to sell them if rates move favorably, then discover that TreasuryDirect has no secondary market. Selling requires initiating a Transfer Direct to move the security to a brokerage, which takes multiple business days and requires having an active brokerage account. If you think you might want to sell before maturity, purchase through a brokerage instead.

Bank account changes. If you change your primary bank account and forget to update your TreasuryDirect linked account, maturing securities and coupon payments will attempt to deposit into the old account. If the old account is closed, the deposit fails and the funds go into a TreasuryDirect holding area. Retrieving them requires contacting customer service. Similarly, if you set up auto-roll reinvestment and your linked bank account changes, a reinvestment that requires debiting additional funds from your bank may fail. Update your bank information on TreasuryDirect any time you change your primary checking account.

Underestimating the TIPS phantom income. Investors new to TIPS sometimes do not realize that the annual inflation adjustment to principal is taxable in the year it accrues, even though no cash is received until maturity. This creates a tax bill without corresponding cash flow, which can be an unpleasant surprise at tax time. TIPS are generally better held in tax-advantaged accounts (IRAs, 401(k)s) where the phantom income does not create a current tax liability — and those accounts are accessed through brokerages, not TreasuryDirect.

Treating I-bonds as emergency savings. The one-year lockout on I-bonds is absolute — no exceptions, no hardship withdrawals, no early access for any reason. Investors who purchase I-bonds with money they might need within 12 months discover this the hard way. I-bonds are a medium-to-long-term savings vehicle, not a cash reserve.

Putting it together: a practical approach

For most US households interested in owning Treasury securities, the practical approach combines both channels based on their strengths.

Use TreasuryDirect for I-bonds — it is the only option, and maxing the $10,000 annual electronic purchase limit is a straightforward decision when the I-bond composite rate is competitive with other savings vehicles. The I-bonds guide covers when the rate makes the bond worth holding.

Use a brokerage for marketable Treasuries — T-bills, T-notes, T-bonds, and TIPS — unless you specifically want the direct-ownership structure of TreasuryDirect or do not have a brokerage account. The brokerage offers the same securities at the same yields with a better interface, easier tax reporting, and immediate secondary-market access.

If you do use TreasuryDirect for marketable securities, set up auto-roll reinvestment on your T-bill purchases to avoid the friction of logging in repeatedly, keep your password in a password manager to avoid lockouts, and understand that selling before maturity requires a transfer to a brokerage that takes several business days.

The securities themselves — regardless of where you purchase them — are the same: direct obligations of the United States Treasury, exempt from state and local taxes, carrying no credit risk in any practical sense, and yielding at or near the federal funds rate for short maturities with higher yields available for the duration risk of longer maturities. The channel you buy them through changes the user experience and the operational friction, but it does not change what you own.

Sources

• US Department of the Treasury, Bureau of the Fiscal Service. “TreasuryDirect — About Us.” https://www.treasurydirect.gov/about/
• US Department of the Treasury. “Treasury Securities & Programs.” https://www.treasurydirect.gov/marketable-securities/
• US Department of the Treasury. “Treasury Bills.” https://www.treasurydirect.gov/marketable-securities/treasury-bills/
• US Department of the Treasury. “Treasury Notes.” https://www.treasurydirect.gov/marketable-securities/treasury-notes/
• US Department of the Treasury. “Treasury Bonds.” https://www.treasurydirect.gov/marketable-securities/treasury-bonds/
• US Department of the Treasury. “Treasury Inflation-Protected Securities (TIPS).” https://www.treasurydirect.gov/marketable-securities/tips/
• US Department of the Treasury. “Series I Savings Bonds.” https://www.treasurydirect.gov/savings-bonds/i-bonds/
• US Department of the Treasury. “Auction Schedule.” https://www.treasurydirect.gov/auctions/upcoming/
• Internal Revenue Service. “Interest Income — Treasury Obligations.” Publication 550, Chapter 1. https://www.irs.gov/publications/p550
• 31 U.S.C. Section 3124 — Exemption from taxation. https://www.law.cornell.edu/uscode/text/31/3124
• Federal Reserve Bank of New York. “Treasury Auction Process.” https://www.newyorkfed.org/markets/treasury-auction-process