FAQs About Treasury Marketable Securities — TreasuryDirect (2024)

The Basics

What are U.S. Treasury Securities?

U.S. Treasury Securities are debt instruments. The U.S. Department of the Treasury issues Securities to raise the money needed to operate the federal government.


The U.S. Treasury periodically buys back unmatured Treasury marketable securities. Buybacks do not always occur on a regular pattern. With buybacks:

  • Treasury has more flexibility in managing the public debt.
  • Treasury can continue offering regular new securities in appropriate size and maturities.
  • Treasury can absorb extra cash whenever revenues are greater than the immediate spending need, making them a good cash management tool.
  • Treasury may be able to lower the government's interest expense by buying higher-yield debt and replacing it with lower-yield debt.

Why should I buy a Treasury security?

Treasury securities are considered a safe and secure investment option because the full faith and credit of the U.S. government guarantees that interest and principal payments will be paid on time. Also, most Treasury securities are liquid, which means they can easily be sold for cash.

What types of securities are offered to individual investors?

We sell Treasury Bills, Notes, Bonds, TIPS, FRNs, and U.S. Savings Bonds to individual investors.

How do Treasury Bills, Notes, Bonds, TIPS, and FRNs differ from Savings Bonds?

Unlike Savings Bonds, Treasury Bills, Notes, Bonds, TIPS, and FRNs are transferable, so you can buy or sell them in the secondary market. You can buy Treasury Bills, Notes, Bonds, TIPS, and FRNs for a minimum of $100, and you can buy savings Bonds for as little as $25.

What are STRIPS or zero-coupon securities?

STRIPS, also known as zero-coupon securities, are Treasury securities that don't make periodic interest payments. Market participants create STRIPS by separating the interest and principal parts of a Treasury Note, Bond, or TIPS. For example, a 10-year Treasury Note consists of 20 interest payments - one every six months for 10 years - and a principal payment payable at maturity. When this security is "stripped," each of the 20 interest payments and the principal payment become separate securities and can be held and transferred separately. STRIPS can only be bought and sold through a broker, dealer, or financial institution and held in the Commercial Book-Entry System.

Noncallable Corpus (Notes & Bonds)
Callable Corpus (Bonds)
Interest Payment (Notes & Bonds)
Interest Payment (TIPS)
Tradable Callable Corpus
Nontradable Callable Corpus
Nontradable Callable Coupon

Buying and Selling

How can I buy a Treasury bill, note, bond, TIPS, or FRNs?

You can buy Treasury Bills, Notes, Bonds, TIPS, or FRNs at one of the auctions we conduct, or in the secondary market. If you want to buy a Treasury security at an auction, set up an account in TreasuryDirect (for noncompetitive bids only) or contact a broker, dealer, or financial institution.

What is a Treasury auction?

Each Treasury Bill, Note, Bond, TIPS, or FRNs is sold at a Treasury auction. In these auctions, all successful bidders are awarded securities at the same price, which is the price based on the highest rate, yield or discount margin of the competitive bids awarded. You can find a complete explanation of the auction process in our Uniform Offering Circular.

How can I find out when an auction will be held?

Before each auction, a press release is issued announcing the security being sold, the amount of the security being offered, the auction date, and other pertinent information.

How can I participate in an auction?

You can participate in an auction by submitting a bid for the security you want to buy. You can bid either noncompetitively or competitively, but not both in the same auction.

You can bid noncompetitively in an amount up to $10 million in each auction. Most individual investors bid noncompetitively. If you bid noncompetitively, you'll receive the full amount of the security you want at the return determined at that auction. Therefore, you don't have to specify the return you'd like to receive.

If you bid competitively, you specify the return - the rate for Bills, yield for Notes, Bonds, and TIPS, or discount margin for FRNs - that you would like to receive. If the return you specify is too high, you might not receive any securities, or just a portion of what you bid for. However, you can bid competitively for much larger amounts than you can noncompetitively.

How do I submit my bid?

You may bid directly through TreasuryDirect (except for cash management bills), TAAPS (with an established account), or you can buy securities through a broker, dealer, or financial institution.

What is the minimum purchase amount for Treasury marketable securities?

The minimum amount that you can purchase of any given Treasury Bill, Note, Bond, TIPS, or FRNs is $100. Additional amounts must be in multiples of $100.

Do I have a choice as to where my Treasury securities are kept?

All Treasury securities are issued in "book-entry" form – an entry in a central electronic ledger. You can hold your Treasury securities in one of two systems: TreasuryDirect or the Commercial Book-Entry System. TreasuryDirect is a direct holding system where you have a direct relationship with us.

The Commercial Book-Entry System is an indirect holding system where you hold your securities with your broker, dealer, or financial institution. The Commercial Book-Entry System is a multilevel arrangement that involves the Treasury, the Federal Reserve System (acting as Treasury's agent), broker, dealer, or financial institution. So, in the Commercial Book-Entry System, there can be one or more entities between you and the Treasury.

What features does TreasuryDirect offer?

TreasuryDirect provides a web-based environment for buying and holding Treasury Bills, Notes, Bonds, TIPS, and FRNs, as well as Savings Bonds. You cannot purchase Cash Management Bills in TreasuryDirect. The TreasuryDirect website can be used to open an account, conduct most transactions, and access account information. Online services are available 24 hours a day, seven days a week. You designate the financial account or accounts into which we make payments and from which we make withdrawals. There are no fees charged when you open an account or buy securities. TreasuryDirect permits accounts for both individuals and various types of entities including trusts, estates, corporations, partnerships, etc. See Learn More about Entity Accounts for full information on the registration types.

What features does the Commercial Book-Entry System offer?

In the commercial book-entry system, you'll maintain your relationship with your broker, dealer, or financial institution and potentially pay fees for their services. The Commercial Book-Entry System allows you to easily buy and sell securities as well as use them for collateral. You can also hold Treasury securities in stripped form, known as STRIPS or zero-coupon securities, in the Commercial Book-Entry System.

How can I sell my Treasury security before maturity?

If you hold your security in TreasuryDirect you can transfer it to an account in the Commercial Book-Entry System. If you hold your security in the Commercial Book-Entry System, contact your broker, dealer, or financial institution or investment advisor. Normally there is a fee for this service.

How do I receive my interest and principal payments?

In TreasuryDirect, the U.S. Treasury makes interest and principal payments directly to the financial account you choose. In the Commercial Book-Entry System, Treasury's interest and principal payments may flow through several institutions on their way to you. For example, a payment could go from the Federal Reserve to a large bank to a smaller bank to your broker, dealer, or financial institution before it gets to you.


What happens when my security matures?

When your security matures, payment of the principal and the final interest payment are made through TreasuryDirect or the Commercial Book-Entry System. Rather than take payment of the principal, customers of TreasuryDirect can choose to roll the principal into another security by scheduling the security to reinvest

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FAQs About Treasury Marketable Securities — TreasuryDirect (2024)


How do I transfer Treasury marketable securities out of my TreasuryDirect account? ›

You cannot sell a Treasury marketable security directly from your TreasuryDirect account. To sell a Treasury marketable security that is in your TreasuryDirect account, you must transfer the security to a broker/dealer account. The broker/dealer can sell the security for you.

What are marketable securities in TreasuryDirect? ›

Treasury marketable securities are direct obligations of the U.S. government that can be bought and sold in the secondary market. There are five types of Treasury marketable securities: Bills, Notes, TIPS, Floating Rate Notes and Bonds.

What are the disadvantages of TreasuryDirect? ›

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.

What are the marketable Treasuries? ›

"Marketable" means that you can transfer the security to someone else and you can sell the security before it matures (reaches the end of its term).

What is the 45 day rule for TreasuryDirect? ›

Customer service personnel will perform the transfer when the form is received and approved. You'll receive an e-mail confirming that activity has occurred in your account. TreasuryDirect requires Treasury Marketable Securities be held for 45 days following original issue before they may be externally transferred.

What happens to a TreasuryDirect account when the owner dies? ›

For an estate that is being administered, the legal representative of the estate must open a TreasuryDirect account in the name of the estate in order to conduct transactions. The legal representative of the estate may then conduct any transactions that are available to an individual account owner.

How do you account for marketable securities? ›

Marketable securities are typically reported right under the cash and cash equivalents account on a company's balance sheet in the current assets section. An investor who analyzes a company may wish to study the company's announcements carefully.

How do marketable securities work? ›

Marketable securities are assets that can be liquidated to cash quickly. These short-term liquid securities can be bought or sold on a public stock exchange or a public bond exchange. These securities tend to mature in a year or less and can be either debt or equity.

Do marketable securities count as cash? ›

Marketable securities are typically included in the cash and cash equivalents line item, the first line item on the current assets section of the balance sheet. Moreover, marketable securities can come in the form of equity securities (e.g. ETFs, preferred shares) and debt investments (e.g. money market instruments).

Is it better to buy treasuries from broker or TreasuryDirect? ›

There are several ways to buy Treasuries. For many people, TreasuryDirect is a good option; however, retirement savers and investors who already have brokerage accounts are often better off buying bonds on the secondary market or with exchange-traded funds (ETFs).

What is one downside to investing in treasuries? ›

But while they are lauded for their security and reliability, potential drawbacks such as interest rate risk, low returns and inflation risk must be carefully considered. If you're interested in investing in Treasury bonds or have other questions about your portfolio, consider speaking with a financial advisor.

What are the limits on TreasuryDirect? ›

Is there a maximum amount I can buy? In a calendar year, one Social Security Number or one Employer Identification Number may buy: up to $10,000 in electronic I bonds, and. up to $5,000 in paper I bonds (with your tax refund)

How do I buy Treasury marketable securities? ›

Individuals, organizations, fiduciaries, and corporate investors may buy Treasury securities through a bank, broker, or dealer. With a bank, broker, or dealer, you may bid for Treasury marketable securities non-competitively or competitively, but not both, for the same auction.

What is an example of a marketable security? ›

Following are a few examples of marketable securities:

Commercial paper, corporate bonds, debentures: These securities are issued by companies to raise funds. Commercial papers are short-term instruments and corporate bonds have longer maturity.

What are the three major categories of marketable securities? ›

The three major categories of marketable securities are: temporary investments in debt or equity securities, short-term cash management securities, and available-for-sale securities. Which of these is not a common control for petty cash? a. Having internal audit conduct regular audits of the petty cash fund.

How do I cash out my TreasuryDirect account? ›

How do I cash my electronic bonds? Go to your TreasuryDirect account. Go to ManageDirect. Use the link for cashing securities.

How do I transfer treasury bills? ›

For a bill held in TreasuryDirect:
  1. Go to "Manage Direct"
  2. Choose "Transfer securities"
  3. Identify the bill or bills you want to transfer.
  4. Choose "External Transfer"
  5. Click the link for FS Form 5511,"TreasuryDirect Transfer Request"
  6. Complete FS Form 5511 and mail it as directed on the form.

What happens when a treasury bill matures on TreasuryDirect? ›

When the bill matures, you are paid its face value. You can hold a bill until it matures or sell it before it matures.

Can you withdraw Treasury bond interest? ›

You can cash in (redeem) your I bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest. See Cash in (redeem) an EE or I savings bond.

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