TreasuryDirect Explained for Beginners

Short answer: TreasuryDirect is the United States Treasury’s own website for buying savings bonds and Treasury securities directly from the government, with no broker and no commission. It is the only place to buy electronic Series I savings bonds, known as I bonds, and one of the cheapest places to buy Treasury bills, known as T-bills. You open a free account, link a bank account, and buy from $25 for savings bonds and $100 for T-bills. I bonds protect your money against inflation and currently pay a composite rate of 5.51 percent for bonds issued from November 1, 2026 to April 30, 2027, according to TreasuryDirect, verified on November 5, 2026. T-bills are short term government loans, sold at a discount and paid back in full at maturity, usually within a year.

TreasuryDirect can look old fashioned. The website is plain, the login uses a virtual keyboard, and the language is full of terms such as noncompetitive bid and semiannual inflation rate. The ideas underneath are simple: you lend money to the United States government, it pays you interest, and it pays you back on a fixed date.

What is TreasuryDirect?

TreasuryDirect is run by the Bureau of the Fiscal Service, part of the United States Department of the Treasury. It lets individuals buy Treasury securities directly from the government, without a broker, a fund, or a commission, and with no fees to buy, hold, or redeem. Marketable securities, such as T-bills, notes, and bonds, can also be bought through a bank or a broker, but savings bonds are only available through TreasuryDirect. It has fewer features than a brokerage account: no trading with other investors, and no stocks or funds.

What can you buy on TreasuryDirect?

There are two groups: savings bonds, sold only on TreasuryDirect, not tradable, with annual limits; and marketable securities, also available through a broker.

Limits verified against TreasuryDirect guidance, checked on November 5, 2026. The $10,000 limit applies separately to I bonds and EE bonds, and the $10 million figure is the maximum noncompetitive bid per auction.

I bonds: the inflation protected savings bond

An I bond is a savings bond designed to protect your money against inflation. It earns interest from two parts: a fixed rate that stays the same for the life of the bond, up to 30 years, and an inflation rate that changes every six months, based on the Consumer Price Index for All Urban Consumers, known as CPI-U. The two parts combine into the composite rate, the headline rate you see in the news.

For I bonds issued from November 1, 2026 to April 30, 2027, the composite rate is 5.51 percent, from TreasuryDirect, announced on November 2, 2026, and verified on November 5, 2026. It combines a fixed rate of 1.40 percent and a semiannual inflation rate of 2.04 percent. The formula is: 0.0140 plus 2 times 0.0204 plus 0.0140 times 0.0204 equals 0.0550856, rounded to 5.51 percent.

Only the fixed rate of 1.40 percent is locked in for the life of your bond. The inflation part resets every six months, so the composite rate will change, with the next announcement due on May 1, 2027. The rate on your bond changes on the six month anniversary of its issue month: a bond bought in November changes rate in May and November.

Electronic I bonds are only available through TreasuryDirect, from $25 up to $10,000 per person per calendar year. The paper I bond option through a federal tax refund ended on January 1, 2025. You must hold an I bond for at least 12 months, and if you cash it in before five years, you lose the last three months of interest. After five years, there is no penalty. Interest accrues monthly, compounds semiannually, and is added to the bond’s value. I bonds are exempt from state and local income tax, and federal income tax is deferred until redemption, or until the bond stops earning interest after 30 years.

Worked example: what a $1,000 I bond earns in a year

This example uses the verified current composite rate of 5.51 percent, and assumes, only for illustration, that the rate stayed the same for a full year. In real life, the rate changes after six months. Interest compounds semiannually, so interest earned in the first six months starts earning interest in the second six months.

Start with $1,000. The six month rate is 5.51 percent divided by 2, which is 2.755 percent. In the first six months, you earn $1,000 times 0.02755, which equals $27.55, so your balance becomes $1,027.55. In the second six months, you earn $1,027.55 times 0.02755, which equals $28.31, rounded, so your balance becomes $1,055.86. Total interest for the year, in this illustration, is $55.86, slightly more than $55.10 from simple interest, because the first six months of interest also earns interest.

T-bills: short term lending to the government

A Treasury bill, or T-bill, is a short term security with a term from 4 weeks to 52 weeks. Common terms are 4, 8, 13, 17, 26, and 52 weeks. A T-bill pays no regular interest. Instead, you buy it at a discount to its face value, and the government pays you the full face value at maturity. The difference is your return.

For example, you might pay $980 for a $1,000 T-bill and receive $1,000 at maturity, for a $20 return. T-bills are sold through auctions, usually weekly. On TreasuryDirect, you place a noncompetitive bid, which means you accept whatever rate the auction sets, and you are guaranteed the amount you asked for, up to $10 million per auction. The minimum is $100, in $100 steps. T-bills are exempt from state and local income tax, although interest is subject to federal income tax in the year the bill matures.

Worked example: a $1,000 26-week T-bill

This example uses a clearly labelled example rate, not a market quote. Suppose you buy a $1,000 26-week T-bill at an example annual rate of 4.00 percent. A 26-week term is half a year, so the return is 4.00 percent times 26 divided by 52, which is 2.00 percent. The discount is $1,000 times 0.02, which equals $20, so you pay $980 and receive $1,000 after 26 weeks, a $20 return. In real life, the auction rate changes every week, so check the actual rate before you buy, on TreasuryDirect, and never use the 4.00 percent figure here as a quote for what a T-bill pays today. The T-bill return is fixed once you buy, while a savings account rate can change at any time, but the money is locked until maturity, so do not use a T-bill for money you may need sooner.

How to open an account and buy, step by step

Opening an account takes about 15 to 30 minutes, plus verification time. You need to be at least 18, have a valid Social Security number, a United States address, a bank account in your name, and an email address.

Step 1: Go to treasurydirect.gov, choose Open an Account, then Individual, and enter your name, Social Security number, date of birth, address, and email. Step 2: Link your bank account with its routing number and account number. Verification can take a few days. Step 3: Set up your login, including a password and security questions. Step 4: Wait for verification. TreasuryDirect may ask you to verify your identity by mail, with a form that needs a signature guarantee from a bank.

Once your account is open, buying is simple. For an I bond, go to BuyDirect, choose Series I, enter $25 to $10,000, choose your linked bank account, and confirm. The bond is issued at once. For a T-bill, go to BuyDirect, choose Bills, pick the term and auction date, enter an amount in multiples of $100, choose your funding source, and confirm. The money leaves your bank account on the settlement date. At maturity, the face value is paid back to your linked bank account automatically, unless you reinvest it.

Three rules catch beginners out. First, a marketable security bought on TreasuryDirect must be held 45 days before you can sell or transfer it. Second, I bonds cannot be redeemed in the first 12 months, and redeeming before five years costs three months of interest. Third, TreasuryDirect offers no automatic reinvestment for I bonds, although it does for maturing T-bills, notes, and bonds. Do not try to get around the I bond limit by opening multiple personal accounts. TreasuryDirect enforces the limit by Social Security number.

Common mistakes to avoid

Do not buy an I bond with money you may need within a year, because the 12 month lock means the money is not available, even in an emergency. Do not assume the 5.51 percent composite rate lasts for a year: it applies for six months, then resets, and only the fixed part of 1.40 percent lasts. Do not forget the three month interest penalty for redeeming an I bond before five years, or buy a T-bill with money you need before maturity. And do not lose your login details or let your linked bank account close without updating TreasuryDirect, which can delay redemptions.

If you are still building the basics, start with the foundations first. A separate emergency fund comes first. See: How to Build an Emergency Fund From Zero Make sure you understand how interest compounds, because that is what makes a small regular habit grow over time. See: How Does Compound Interest Work? Check that your bank is insured before you keep a large balance there, and know what the insurance covers. See: Is My Money Safe in a Bank? What Does Insurance Mean? And when you compare a T-bill return with a savings account, compare the annual yield properly, not just the headline rate. See: What Is APY, and Why Is It Different From Interest Rate?

FAQ

What is TreasuryDirect in simple terms?

TreasuryDirect is the United States Treasury’s own website for buying Treasury securities directly from the government. You open a free account, link a bank account, and buy with no broker and no commission. It is the only place to buy electronic I bonds.

What is the current I bond rate?

For I bonds issued from November 1, 2026 to April 30, 2027, the composite rate is 5.51 percent, according to TreasuryDirect, verified on November 5, 2026. It combines a fixed rate of 1.40 percent, which lasts for the life of the bond, with a semiannual inflation rate of 2.04 percent, which resets every six months.

Can I cash in an I bond at any time?

No. You must hold an I bond for at least 12 months. Redeeming before five years loses the last three months of interest. After five years, there is no penalty, and it earns interest for up to 30 years.

Are TreasuryDirect investments safe?

Treasury securities are backed by the full faith and credit of the United States government, but that does not mean they are free of risk. Inflation can reduce what your return buys, interest rates can change, and an I bond redeemed early loses three months of interest. They are not covered by FDIC deposit insurance, because they are not bank deposits.

Do I pay tax on I bonds and T-bills?

Interest from both is exempt from state and local income tax. Federal tax applies, but the timing differs: I bond interest is deferred until redemption, while T-bill interest is taxed in the year the bill matures.

Conclusion

TreasuryDirect is a simple, low cost way to buy Treasury securities directly from the United States government. I bonds protect against inflation, with a current composite rate of 5.51 percent for bonds issued from November 1, 2026 to April 30, 2027, a fixed rate of 1.40 percent, and a $10,000 annual purchase limit per person, while T-bills are short term securities with a $100 minimum, sold at a discount and paid back in full at maturity, in terms from 4 to 52 weeks. Both are exempt from state and local tax and backed by the full faith and credit of the United States government. Remember the 12 month lock on I bonds, the three month penalty for redeeming before five years, the 45 day holding rule for marketable securities on TreasuryDirect, and the six month rate reset. If you open an account, start small, keep your emergency fund in an accessible savings account first, and write down what you bought and when it matures. Check the current rates at any time at treasurydirect.gov.

This article is for general information and education only. It is not legal or financial advice.