Treasury Direct Bond Basics

Treasury bonds are a part of a collective known as “treasuries” that are offered by the government, as well as the Treasury Direct System, which allows you to participate in incremental treasury auctions. There are some basics that you should know about the Treasury Direct System. To learn more about it – and treasuries in general – let’s take a closer look at what they all are.

What Are Treasury Bonds?

To understand the Treasury Direct System, it’s important to first understand treasury bonds and other debt securities offered by the government. A government bond is also known as a fixed-income security and includes bills (debt securities that mature in less than one year), notes (debt securities that mature in 1-10 years), and bonds (debt securities that mature in more than 10 years). Marketable securities that are offered from the government are considered “treasuries” and are deemed safe investment tools as long as the country’s economy is not in jeopardy.

How Does the Treasury Direct System Work?


If you’re interested in purchasing government treasury bonds then you can benefit from the Treasury Direct System. Through this system, investors are able to participate in the Federal Reserve’s regularly-scheduled auctions that include the sell of three- and six-month T-Bills, as well as two, five- and 10-year notes. When investing, the minimum purchase amount is $1,000 and must be made in those denominations.

In order to be paid interest on your investments, you must open an account by submitting your first tender form. After you’ve opened your account, and have purchased your first treasury security, you will receive a Statement of Account describing your transaction. And when the time comes for payment, your interest will be issued via a Direct Deposit payment method.

Many investors love the Treasury Direct System because they don’t have to worry about brokerage fees or other transactional charges. You may too. So if you’re interested in purchasing a bond, this may be the route you want to take.