Do Savings Bonds Still Exist?

Yes, savings bonds still exist and remain a popular, low-risk investment option backed by the U.S. Treasury. Currently, the U.S. government sells two primary types of savings bonds: Series EE bonds and Series I bonds. These bonds are predominantly sold electronically through the TreasuryDirect website, making them easily accessible for individuals to purchase for themselves, their children, or as gifts.

Types of Savings Bonds Available

While the days of paper savings bonds have largely passed, their electronic counterparts offer a secure way to save money. Both Series EE and Series I bonds are purchased at face value and accrue interest, offering different benefits depending on your financial goals.

Series EE Bonds

Series EE bonds are long-term investments designed to double in value over a fixed period, typically 20 years.

• Fixed Interest Rate: They earn a fixed interest rate, which is set at the time of purchase.
• Guaranteed Growth: The U.S. Treasury guarantees that an EE bond will double in value if held for 20 years. If the fixed rate doesn't achieve this, a one-time adjustment is made at the 20-year mark.
• Maturity: They continue to earn interest for 30 years from their issue date.

Series I Bonds

Series I bonds are an excellent choice for protecting your investment from inflation, as their interest rate adjusts over time.

• Composite Interest Rate: Their interest rate is a combination of a fixed rate (which stays the same for the life of the bond) and a variable inflation rate (which changes every six months).
• Inflation Protection: This structure makes I bonds particularly appealing during periods of high inflation, as the variable component adjusts to reflect changes in the Consumer Price Index for all Urban Consumers (CPI-U).
• Maturity: They also earn interest for up to 30 years from their issue date.

How to Purchase Savings Bonds

Today, buying savings bonds is a streamlined process primarily conducted online.

• TreasuryDirect: The official platform for purchasing U.S. Treasury securities, including savings bonds, is TreasuryDirect. You will need to open an account to buy bonds.
• Purchase Options: You can conveniently buy Series EE and Series I bonds:
  • For your own account.
  • For a child whose account is linked to yours.
  • As a gift for someone else.
• Minimum Purchase: Bonds can be purchased in denominations as low as $25, up to a maximum of $10,000 per series per calendar year per Social Security Number.

Why Invest in Savings Bonds?

Savings bonds offer a unique blend of safety, accessibility, and potential for growth, making them suitable for various financial objectives.

• Safety and Security: They are backed by the full faith and credit of the U.S. government, making them one of the safest investments available.
• Tax Advantages: Interest earned on savings bonds is exempt from state and local income taxes, and federal taxes can be deferred until the bond is redeemed or matures.
• Flexible Redemption: While there's a penalty for cashing out before five years (you'll forfeit the last three months of interest), you can redeem bonds after just one year, offering some liquidity.
• Education Savings: Interest earned on qualified savings bonds can be tax-free if used to pay for higher education expenses.

Series EE vs. Series I Bonds: A Quick Comparison

Savings bonds continue to be a foundational component of many personal financial plans, offering a straightforward and secure way to save for future goals.