Treasury Direct Review
Bonds get a bad rap. They’re not as flashy as the high-flying growth and technology stocks. Rising Federal Reserve interest rates mean widening yields make trading them on secondary markets a losing play.
Still, for many Americans, fixed-income investing is part of an overall strategy. Investing in bonds means safe, reliable, and predictable returns for as long as the bond is held. And, for some, having bonds gives a sense of ownership and stake in America’s financial future as you’re funding operations today in exchange for a reward tomorrow.
Bonds 101
In short, a treasury bond is a loan between an investor and a borrower – in this case, you’re the investor, and the American government is the borrower. You’re lending the government money in exchange for a promise that the money (principal) will be returned in the future with interest.
Most bonds available to retail investors have similar traits:
Par value: this is the principal paid for the bond; i.e., if you buy a bond for $1,000, that security has a par value of $1,000. Bonds can trade on secondary markets above or below par, but that isn’t very easy and out of the scope of what Treasury Direct offers.
Coupon rate: this is the interest payment on the bond. Coupons range depending on many factors, but most coupons on bonds bought by retail investors are paid on a predictable schedule, like quarterly or semiannually. Bonds can have fixed or variable (changing) coupon rates.
Maturity: this is when the bond expires and the principal is repaid.
To break it down, if you buy a $100 30-year bond in 2025 with a coupon rate of 5% paid annually, you will get 5% of the bond’s par value (in this case, $20) every year until 2052. Once that year arrives, you will receive one final 5% payment and your principal ($100) back.
What is Treasury Direct?
Bonds can be bought and sold through many brokerages, but Treasury Direct is a direct pipeline from the federal government to you. When you open an account with Treasury Direct, you can buy and redeem (cash in) savings bonds and other fixed-income securities like Treasury Bills, Bonds, and Notes.
Treasury Direct Complaints
Before we go deeper, we would be remiss not to mention that the Treasury Direct website is terrible. If you didn’t know better, you would think it was a scam website based on appearance, and its functionality isn’t much better. To ensure you’re at the right place, ensure the URL ends in .gov.
Available Investments
Savings bonds are the most popular security for many small investors and represent a low-cost way to access fixed-income assets. There are two types of savings bonds:
EE Bonds
EE Bonds are guaranteed to double in value in 20 years and earn a fixed rate of interest that doesn’t change. Buying a $25 EE Bond will yield a monthly interest rate (currently a measly 0.10%) paid semiannually, and you will get $50 back in 2042.
EE Bonds are only available online (the days of paper certificates are mostly gone) and can be bought from $25 to $10,000. You can invest a maximum of $10,000 every calendar year and cash in the bond as early as one year from purchase, although the bond won’t have doubled, and you’ll forego three months of interest as a penalty.
I Bonds
I Bonds are a fixed-income holy grail right now and are the most popular among retail investors. The I Bond protects against inflation and has a variable rate set every six months based on inflation. Right now, the interest rate is 9.62%. Once bought, an I Bond earns that interest for six months before it changes to the new rate. Rates are recalculated at the end of October and April.
If that’s confusing, say you bought an I Bond today. You would earn 9.62% on the I Bond until April 10th, 2025, when it would change to the new rate set on October 31st, 2025. With inflation raging, it can safely be assumed that the rate will remain high.
You can buy I Bonds in any amount up to $10,000. This is the maximum limit per calendar year, although you can buy an additional $5,000 with your tax refund. I Bonds can also be cashed out after one year, but you forego the last three months of interest if you do.
Buying Bonds with Treasury Direct
From the main site, treasurydirect.gov, navigate to “Open a New Account.” The site will walk you through the steps that include identity verification before you’re ready to log in and buy a bond.
You’ll notice that FedInvest and SLGSafe are also account options. Don’t worry about these.
Logging in is a hassle – don’t even try on mobile.
First, instead of a username, you enter your account number. Be sure to save the account somewhere safe because account recovery is challenging.
This is where logging in becomes complicated on a desktop and impossible on the phone. Instead of using your keyboard to enter the password, you use a virtual keyboard by clicking each letter. The screen zooms in and out when using a phone, and the touch sensitivity is poor. Logging in correctly may take multiple attempts, and locking yourself out is possible. The virtual keyboard also means your browser can’t save the password, so store it in a secure place with your account number.
Once you’re in, you’ll see an account overview that shows your bond holdings and account statuses. We’ll focus solely on Savings Bonds, but we’ll also cover the other options below.
If you want to buy a savings bond, click on the tab “BuyDirect” at the top of the page. Another note – whatever you do, don’t use the back button on your browser. It will create an error, and you’ll need to log back in (we were reminded of this “feature” by accidentally clicking the back page at this point in the process).
Logged back in, we’re at the BuyDirect page and see all available securities. We’ll continue with savings bonds and select EE Bonds, as our account already bought the annual maximum for I Bonds.
You enter the total amount and funding source (you set up a bank linkage during account creation). You can also create recurring purchases to increase your holdings continually. Since the EE Bond isn’t a great investment compared to I Bonds, we’re only putting $100 into that asset for this article.
From there, you’ll submit and verify the purchase. Bonds usually take a few days to appear in your account holdings, but you can see your current assets on the main page or under the “Current Holdings” tab.
What else is on Treasury Direct?
Savings bonds are the most popular option for average investors, but there are other functions.
You can buy fixed-income securities with varying maturities and coupon rates. These are found under marketable securities and don’t have an annual limit. These securities include:
T-Bills, which have a maturity of one year or less.
T-Notes, with a maturity between two and ten years.
Bonds, whose maturity is the longest at a minimum of ten and maximum of 30 years.
TIPS: These are inflation-protected bonds, but not great options for most investors as the interest rate isn’t as good as I Bonds and can even go negative (far too complicated for the scope of this article).
If you have old paper bonds floating around, you can convert them to digital bonds to monitor in your account. I did this recently for an old $100 bond with a 2030 maturity. It takes a long time, as I mailed in the bond four weeks ago and just got an acknowledgment of receipt a few days ago. The bond has not yet been converted and is not reflected in my account.
Treasury Direct Review Summary
Should I use Treasury Direct? Yes. The website is terrible and clunky, but 9% guaranteed returns with I Bonds is too good to pass up. The stock market lost more than 20% this year, and inflation is destroying the value of cash holdings daily. I Bonds are a savior in today’s economy, and I recommend buying as much as possible while the high rates hold.
Visit Treasury Direct Website
Visit Treasury Direct
Updated on 2/13/2025.
Arthur Chachuna is a professional personal finance blogger, and the owner of Brokerage-Review.com.
He has been an avid investor for 25 years, and has a background in both applied math and programming.
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