A U.S. savings bond is a loan you make to the federal government, repaid with interest. The two current types are Series EE bonds (fixed rate, guaranteed to double in value after 20 years) and Series I bonds (a composite rate that adjusts every 6 months for inflation). Both are sold electronically at TreasuryDirect.gov from $25 up to a $10,000 annual purchase limit per series, per person, and must be held at least 1 year — cashing before 5 years forfeits the last 3 months of interest.
A U.S. savings bond is a direct loan to the federal government: you buy it for its face value, the Treasury pays interest over time, and you redeem it later for the original amount plus accrued interest. Unlike a bank CD, savings bonds are backed by the full faith and credit of the U.S. government rather than FDIC deposit insurance, and they're purchased directly from the Treasury — not through a bank.
Series EE bonds earn a fixed rate of interest that's locked when you buy the bond and doesn't change over the bond's life. The Treasury guarantees that a Series EE bond will be worth double its purchase price if held the full 20 years — if the fixed rate alone wouldn't get you there, the Treasury makes a one-time adjustment at year 20 to hit that doubling guarantee. Per TreasuryDirect, the fixed rate is set twice a year (each May 1 and November 1) and applies to bonds issued during that 6-month window.
Series I bonds combine a fixed rate (locked at purchase, same for the bond's life) with an inflation-adjusted variable rate that resets every 6 months based on the Consumer Price Index. The two combine into a single composite rate. Because the variable component tracks inflation, an I bond's total rate moves over time even though the fixed portion never changes — which is the entire point of the product: protecting purchasing power against inflation.
Savings bond interest is subject to federal income tax but exempt from state and local income tax — a meaningful advantage in high-state-tax areas. You can also choose to defer reporting the interest until you cash the bond or it reaches final maturity, rather than paying tax on it year by year. A narrower break, the Education Savings Bond Program, lets you exclude the interest from federal tax entirely when the proceeds from Series EE or I bonds issued after 1989 pay for qualified higher-education expenses — but only if the bond owner was age 24 or older when the bond was issued, income falls under IRS thresholds, and IRS Form 8815 is filed. A bond registered to a child doesn't qualify later even after the child turns 24.
Savings bonds are one option for long-horizon, inflation-protected savings — for money you might need sooner, an FDIC-insured CD or high-yield savings account offers more flexibility. Compare current CD and savings terms at ClearValue Banking.
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