Unlike traditional bonds, saving bonds are not subject to the ups and downs of the stock market. Savings bonds are low risk, government-backed bonds with guaranteed rates of interest. There is a tax advantage to savings bonds because the owner may be able to partially or completely exclude their interest from Federal income tax.
There are three types of saving bonds: I, EE/E and HH/H. They are issued by the US Treasury Department. They can only be purchased in one of three ways: 1) through authorized financial agencies, such as a bank; 2) through payroll deductions; and 3) through an electronic service called TreasuryDirect. All saving bonds are registered and held in name of the person who owns them. Savings bonds are registered securities. They can be replaced if they are lost or destroyed.
Series I bonds are available at face value only. Series I bonds come in $50 to $10,000 denominations. No more than $30,000 (face value) of paper bonds and $30,000 of electronic bonds purchased each year. They must be held for a minimum of 1 year and they will accrue interest for 30 years. Interest on the Series I bonds is based on a fixed rate (announced by the Bureau of...
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