Income Beginner: US Savings Bonds

Introduction to US Savings Bonds What Are Savings Bonds? What Types of US Savings Bonds Are Available? How Much Money Do Savings Bonds Earn? How Do You Redeem Savings Bonds? What Taxes Apply to Earnings from Savings Bonds? Where Can You Buy Savings Bonds? Summary of US Savings Bonds
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What Types of US Savings Bonds Are Available?

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What Types of US Savings Bonds Are Available?

There are three types of US savings bonds today, distinguished by the ways in which they pay interest.

Things To Know

  • The US government sells Series EE and Series I bonds.
  • Savings bonds offer people with limited resources a way to begin an investment program.
  • Series EE bonds and Series I bonds are sold at face value.

Background on savings bonds

If you bought or received a savings bond before 1980, you would have owned a Series E or Series H savings bond. That year, Series EE and Series HH bonds replaced the original series. The two current series offer different maturities and interest rates. In 1998, the US government introduced inflation-indexed Series I bonds.

EE bonds

The US government issues electronic Series EE bonds at their face value, which begins at $25 and rises in increments of one cent. At maturity, you can redeem the bonds at their face value. You may buy up to a face value maximum of $10,000 in Series EE bonds annually. Series EE bonds earn interest for 30 years.

Note: as of January 1, 2012, paper savings bonds are no longer being sold. This is part of the U.S. Treasury’s goal of moving toward electronic savings bonds.

HH bonds

Series HH bonds earn interest for 20 years. You were able to acquire Series HH bonds only through an exchange of your Series E or Series EE bonds; however, as of September 2004, HH/H series bonds are no longer available for purchase. Existing bonds have denominations of $500, $1,000, $5,000, and $10,000. Unlike Series EE bonds, Series HH bonds were acquired at their full face values and thereafter receive regular interest payments.

I bonds

Series I bonds also are sold at their full face value, beginning with a minimum denomination of $25. You can increase the denomination in increments of as little as one cent, up to $10,000. Like Series EE bonds, you receive the interest earned when you cash the bond. I bonds earn interest for 30 years.

Ways to use savings bonds

You can use all types of savings bonds in several ways—for example, as a regular savings program through payroll deductions and as a very safe instrument that provides stability to your investment portfolio. Because of the low minimum investment requirements, they also offer people with limited resources a way to begin an investment program.

Series I paper savings bonds remain available for purchase using part or all of one’s tax refund.