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U.S. Savings Bonds

Savings bonds are issued by the federal government and backed by the "full faith and credit" guarantee. But unlike Treasuries, savings bonds may be purchased for an investment as low as $25. Like Treasuries, the interest earned on your savings bonds is subject to federal income tax, but not state or local income taxes.

Savings bonds can be purchased from the U.S. Department of the Treasury, at banks and credit unions, and are often offered by employers through payroll deduction. But unlike most other Treasuries, savings bonds cannot be bought and sold in the secondary market. In fact, only the person or persons who have registered a savings bond can receive payment for it.

As of January 1, 2012, paper savings bonds are no longer sold at financial institutions. Electronic savings bonds in Series EE and I will remain available through purchase in TreasuryDirect®, a secure, Web-based system operated by Public Debt.

For information about how to handle savings bonds left in the wake of a death, see TreasuryDirect's information on Death of a Savings Bond Owner.

The two most common types of savings bonds are I Bonds and Series EE Savings Bonds. Both are accrual securities, meaning the interest you earn accrues monthly at a variable rate and the interest is compounded semiannually. You receive your interest income when you redeem the bonds.

The I Bond tracks inflation to prevent your earnings from being eroded by a rising cost of living. Series EE Savings Bonds issued after May 2005 earn a fixed rate of interest. Both types of bonds are exempt from all state and local income taxes.

For more information about I and EE bonds see TreasuryDirect’s I and EE Savings Bond Comparison.

You can purchase savings bonds electronically through the TreasuryDirect Website. No physical certificate will exist. TreasuryDirect allows you to buy, track, change registration and redeem your bond—all electronically via a secure online account. A program called SmartExchangeSM allows TreasuryDirect account owners to convert their paper savings bonds to electronic securities in a special Conversion Linked Account in their online account.

Whether you buy savings bonds electronically or in paper form, most savings bonds are sold at face value. This means that if you buy a $100 bond, it costs you $100, on which you earn interest.

Remember to Redeem!

Always check the savings bond's issue dates to find out if it is still earning interest. Depending upon the date that you purchased your securities, it may be time to redeem them.

I Bonds and EE Bonds Snapshot

Issuer U.S. Treasury
Minimum Investment $25 if purchased electronically; $50 for paper I bond.
Interest Payment Interest accrues monthly—paid when bond is redeemed
How to Buy/Sell TreasuryDirect, Broker
Bond Interest Rate I Bond interest rate is a combination of two separate rates—a fixed rate of return and a variable semiannual inflation rate. See TreasuryDirect I Bonds.

EE Bonds issued after May 2005 offer fixed rates determined when the bonds are issued. See TreasuryDirect EE Bonds.
Price Information TreasuryDirect or through a broker
Risk Profile No call or liquidity risk and virtually no credit and default risk.

Interest rate risk: Except for Series EE bonds issued before May 2005, all savings bonds are exposed to interest rate risk.

Inflation risk: I bonds are protected from inflation, but EE bonds are not. Opportunity risk exists, particularly for I bonds, which are particularly susceptible during periods of low inflation and the rare instances of deflation.
Website for More Info TreasuryDirect