What Is TreasuryDirect?
Let me explain TreasuryDirect to you directly: it's the online platform where you can buy federal government securities straight from the U.S. Treasury without any intermediaries.
Key Takeaways
You need to know that TreasuryDirect is your go-to online spot for purchasing federal government securities directly from the U.S. Treasury. It offers new issues of Treasury bills, notes, bonds, savings bonds, and TIPS. By cutting out middlemen like brokers and banks, it saves you on commissions and fees. To get started, you'll need a Social Security number or EIN, a U.S. address, and a checking or savings account.
Understanding TreasuryDirect
TreasuryDirect sells Treasury bills, notes, bonds, Treasury Inflation-Protected Securities (TIPS), and savings bonds, all backed by the full faith and credit of the U.S. government, which uses them to finance federal debt.
The TreasuryDirect website is the main portal for the U.S. Treasury to sell its securities. Essentially, it's the only way you can buy and redeem Treasury securities directly from the government in paperless electronic form. You can deposit money from your personal bank account and withdraw it, and you can roll over repurchases as your current securities mature.
By using the TreasuryDirect trading system, you eliminate banks, brokers, and dealers as middlemen, which saves you money on commissions and fees. The minimum investment required in the TreasuryDirect market is $100.
These Treasury securities are sold through an auction process that sets the security’s rate and yield. You can place either competitive or non-competitive bids. If you're a competitive bidder, you specify the rate, yield, or discount margin you'll accept; as a non-competitive bidder, you agree to whatever the auction establishes.
At the end of the auction, the Treasury issues securities first to all non-competitive bidders, then to competitive ones from the lowest to the highest bid, until the total amount is issued. Every accepted bidder gets the terms of the highest accepted offer.
Types of Treasury Securities Available Through TreasuryDirect
- Treasury bills
- Treasury notes
- Treasury bonds
- Series I savings bonds
- Series EE savings bonds
- Treasury Inflation-Protected Securities (TIPS)
How to Open a TreasuryDirect Account
To open a TreasuryDirect account, you must have a Social Security number or Employer Identification Number (EIN), a U.S. address, a checking or savings account for transferring funds to and from your TreasuryDirect account, an email address, and a secure web browser with internet connection. This applies to individuals, institutions, corporations, partnerships, limited liability companies (LLCs), sole proprietors, estates, and trusts.
Here's something important: you can request the IRS or your state tax department to deposit your tax refund directly into your TreasuryDirect account and use those funds to buy securities.
Of course, you can still buy Treasury securities through traditional channels like brokerages or banks, even with a TreasuryDirect account; however, financial professionals can't purchase securities for clients through the system.
Special Considerations for TreasuryDirect
Remember, only new issues can be bought through TreasuryDirect. These securities follow a schedule for release, known as on-the-run Treasuries. Treasuries issued before the most recent one of a particular maturity are called off-the-run Treasuries, as they're removed from TreasuryDirect. For instance, the 52-week bill is auctioned every four weeks, after which the previous 52-week bills are only available in the secondary market.
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