What are savings bonds?
Savings bonds are loans to the U.S. government that pay interest. The two kinds sold today are Series EE and Series I. You buy electronic bonds at face value, and they earn interest for up to 30 years.
Series EE bonds earn a fixed rate and are guaranteed to double in value after 20 years. Series I bonds earn a rate that combines a fixed part with an inflation part, and it resets every six months. Interest is exempt from state and local income tax, but federal tax applies.
How do I use the savings bond calculator?
Choose a series, then enter the amount, the rate and how many years you'll hold the bonds. The calculator starts with the rates for bonds issued from November 2026 through April 2027: 2.90% for Series EE and 5.51% for Series I, from TreasuryDirect. It compounds interest every six months, applies the EE doubling at 20 years, and takes off the last three months of interest if you cash in before five years. For an I bond it assumes today's rate holds, which it won't exactly.
Can savings bonds lose value?
One of the main benefits of savings bonds is that they can’t lose their value. The interest rate on savings bonds can’t go below zero. This means that the savings bond gains value yearly until it reaches maturity.
Further, the government cannot deny the value of savings bonds. Investors will always be able to cash in their savings bonds.
The drawback is that money is tied up for at least 12 months, and returns can trail stocks over long periods.
Where can I buy savings bonds?
You buy electronic savings bonds through TreasuryDirect. You can buy up to $10,000 of each series per person per calendar year. Banks and other sellers no longer sell them directly.
Savings bonds are a popular gift, and their predictable interest can suit part of a retirement plan.
What is the difference between EE and I bonds?
The main difference between EE bonds and I is how they earn interest. EE bonds earn a fixed interest rate and are guaranteed to double in value in 20 years. I bonds earn a variable rate of interest. Thus, I bonds are affected by inflation. As inflation rises, the value of the bond increases.
EE bonds suit you if you plan to hold for 20 years and want a known result.
I bonds have the potential to return greater or lesser returns than EE bonds. Riskier investors may prefer I bonds if they believe inflation will rise faster than usual. If inflation is predicted to grow faster than the fixed interest rates associated with EE bonds, you may want to buy I bonds.
Can savings bonds be transferred to another person?
When you buy a savings bond, you can put down one or two owners on the bond. Only a listed owner of the bond can cash the bond.
Savings bonds can be transferred to another person. You must issue a request to the U.S. Treasury Department to do this. You must wait five business days after you buy the bond before you make any ownership changes.
Where can I cash savings bonds?
Electronic savings bonds are cashed in through your TreasuryDirect account, and the money goes to your bank account. Many banks can cash paper bonds, usually for their own customers.
Paper bonds can also be redeemed through the U.S. Department of the Treasury. You can send your savings bonds to the Treasury Retail Securities Services and the proper forms. Afterward, the Treasury will mail you a check with your returns.