Treasury Direct

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on September 14, 2023

Get Any Financial Question Answered

What Is TreasuryDirect?

TreasuryDirect is an online platform provided by the U.S. Department of the Treasury that allows individuals and institutions to purchase and manage U.S. government securities directly from the source.

It offers a range of investment options, including Treasury bills, notes, bonds, and savings bonds, among others.

Established in the late 1990s, TreasuryDirect was designed to streamline the process of buying and selling U.S. government securities.

The idea was to bypass the need for a broker or financial advisor, saving investors potential fees and giving them direct control over their investments.

TreasuryDirect provides a range of services that cater to the needs of both individual and institutional investors, including the ability to schedule recurring purchases, the option to gift securities, and access to historical and current interest rate data.

The platform also offers resources and tools to help investors understand the different types of securities available and how to make informed investment decisions.

Types of Securities Available in TreasuryDirect

Treasury Bills

Treasury Bills, also known as T-Bills, are short-term securities that typically mature in a few days to 52 weeks. They are sold at a discount from their face value. This means that you buy them for less than their face value, and upon maturity, you receive the full face value.

The difference between the purchase price and the face value is the interest you earn. Given their short-term nature, T-bills are suitable for investors seeking temporary placement of funds in low-risk assets.

Treasury Notes

Treasury Notes, or T-Notes, are medium-term securities with maturities of 2, 3, 5, 7, or 10 years. They pay interest every six months until maturity, and when they mature, you receive the note's face value. They are issued in denominations of $100 and more.

T-notes can be a good choice for those looking for a balance between a consistent income stream and a commitment to holding the security for several years.

Treasury Bonds

Treasury Bonds are long-term securities that mature in 20 or 30 years. Similar to T-Notes, they pay interest every six months.

These bonds can be beneficial for long-term investors who want regular income over many years and are comfortable with locking their money away for a more extended period.

Treasury Inflation-Protected Securities (TIPS)

Treasury Inflation-Protected Securities (TIPS) are securities that protect investors from inflation. They are available in terms of 5, 10, and 30 years. With TIPS, the principal increases with inflation (as measured by the Consumer Price Index) and decreases with deflation.

Interest is paid semi-annually at a fixed rate on the adjusted principal. So, when the principal adjusts with inflation or deflation, so does the interest payment. At maturity, investors receive the adjusted principal or the original principal, whichever is greater.

This feature makes TIPS a good option for those looking to maintain the purchasing power of their money.

US Savings Bonds

Series EE and Series I Savings Bonds are also available on TreasuryDirect. EE bonds are sold at face value and double in value after 20 years.

I Bonds, on the other hand, are inflation-indexed, offering a return combined of a fixed rate and an inflation rate. They are sold at face value, and interest accrues monthly and compounds semiannually.

Savings Bonds are popular for education savings and gifting, thanks to their low minimum purchase requirement and tax benefits.

Types of Securities Available in TreasuryDirect

Benefits of Using TreasuryDirect

Safety and Security

Perhaps the most significant advantage of TreasuryDirect is the safety and security it offers. As U.S. government securities, the investments available through the platform are backed by the full faith and credit of the U.S. government, making them one of the safest investment options available.

No Commissions or Fees

TreasuryDirect allows investors to purchase securities directly from the U.S. Treasury, eliminating the need for a broker and associated fees. This can result in significant savings, particularly for investors who regularly purchase government securities.

Easy Access and Convenience

The online nature of TreasuryDirect allows investors to access their accounts and manage their investments 24/7 from any location with internet access. The platform's user-friendly interface also makes it easy for individuals to navigate and transact on the platform.

Drawbacks of Using TreasuryDirect

Limited Investment Options

While TreasuryDirect offers a range of U.S. government securities, it lacks other investment options like stocks, corporate bonds, and mutual funds. Investors looking for a one-stop-shop for all their investment needs may find the platform limiting.

Low Return on Investment

Government securities are low-risk investments, and as such, they offer relatively low returns compared to riskier assets like stocks or corporate bonds. Investors seeking high returns may not find TreasuryDirect appealing.

No Secondary Market

Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.

Interface Can Be Clunky

Some users report that TreasuryDirect's interface can be less user-friendly than other online investment platforms. This could pose a challenge for less tech-savvy investors or those accustomed to more streamlined digital interfaces.

Benefits and Drawbacks of Using TreasuryDirect

TreasuryDirect's Role in Personal Finance Planning

Building a Diversified Portfolio

Despite its limitations, TreasuryDirect can play a crucial role in personal finance planning by helping investors build a diversified portfolio. The platform's wide range of government securities can serve as a safe and stable component of an investment portfolio, providing balance to riskier assets.

Long-Term Investment and Retirement Planning

TreasuryDirect is an excellent tool for long-term investment and retirement planning. The platform's long-term Treasury bonds and savings bonds are particularly suitable for these purposes, offering reliable returns over the years.

Moreover, the safety of these investments makes them a popular choice for retirement savings.

How to Open a TreasuryDirect Account

Opening a TreasuryDirect account is a straightforward process, but it does require some necessary information and steps to complete. Here are the detailed steps to guide you through the process:

Step 1: Gather Your Information

Before you begin the account creation process, gather the necessary information. You will need:

  • Your Social Security Number (SSN) or Employer Identification Number (EIN)

  • A U.S. address

  • An email address

  • Your bank account number and bank routing number (This is the account from which purchases will be made and into which funds from redeemed securities will be deposited)

Step 2: Create an Account

Navigate to the TreasuryDirect website and click on the "Open an Account" link. This will take you to a page where you can select the type of account you wish to open. For most individuals, this will be a "TreasuryDirect" account.

Step 3: Fill In Personal Information

Next, you'll be prompted to fill in your personal information. This will include your name, Social Security number, email address, and other pertinent information. Ensure the details you provide are accurate, as they'll be used to verify your identity.

Step 4: Create Security Information

You'll then create a password and a set of security questions and answers. This information will be used to protect your account and confirm your identity in the future.

Step 5: Set up Bank Information

Enter your bank account and routing numbers in the space provided. This information will be used to transfer money for buying securities and depositing funds from redeemed securities.

Step 6: Review and Submit Your Application

Once you've entered all your information, you'll have the opportunity to review everything before you submit your application. Make sure to double-check all of the details you've entered. Once you're sure everything is correct, click the "Submit" button to create your account.

After you've completed these steps, TreasuryDirect will send you an email confirming your account creation. You'll need to follow the instructions in the email to validate your email address and complete the account setup.

How to Open a TreasuryDirect Account

Final Thoughts

TreasuryDirect provides individuals and institutions with a convenient and direct way to purchase and manage U.S. government securities.

With its range of investment options and user-friendly interface, the platform has gained popularity among investors seeking safety and reliability in their investment choices. The platform offers numerous benefits, including safety and security, no commissions or fees, and easy access.

However, there are also drawbacks to consider, such as limited investment options, low return on investment, and the absence of a secondary market for securities.

Despite these limitations, TreasuryDirect plays a crucial role in personal finance planning, particularly in building a diversified portfolio and long-term investment and retirement planning.

Opening an account with TreasuryDirect is a straightforward process. The platform requires basic personal and banking information and follows standard procedures to verify identity.

Users can set up different types of accounts depending on their needs, including individual, entity, and minor accounts. Consult a financial advisor for further guidance on government securities and how to maximize investing through TreasuryDirect.

Treasury Direct FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

Discover Wealth Management Solutions Near You