US Savings Bond

US savings bonds are savings products that are government-backed, meaning they are issued by the US Treasury. Because of this, they are usually considered reliable and low-risk security products for use towards almost any kind of financing. You can purchase US savings bond to finance your education, to provide you with supplemental retirement income, as graduation or birthday gifts, as well as other purposes.

Kinds of US Savings Bond

Currently, there are two kinds of US savings bond issued by the US Treasury. The first kind is the paper EE bonds which are available for purchase in most financial institutions, local or otherwise. They may also be purchased through the payroll deduction plan of a participating employer.

The other type of US savings bond is the electronic type. The electronic EE bond can be purchased and managed as well as redeemed through a personal TreasuryDirect account to ensure the utmost security and safety.

Advantages and Disadvantages of Each Type

Purchasing either type of US savings bond may have some advantages or disadvantages. In the case of paper EE bonds, their one distinct advantage over their electronic counterpart is their lowered purchase prices. Paper US savings bond are sold at half the price of their face value. Therefore, if you purchased a $50 bond, you only have to pay $25. However, there is a downside to this: the bond will not be worth its face value until it has matured. In other words, you basically get what you pay for at the time of the purchase.

This is a feature that is not present in electronic US savings bonds. Because electronic EE bonds are sold at face value, you get what you’ve been aiming to get in the first place. So, for instance, if you bought a $50 bond, you will have to pay $50 for it and there is no more waiting time needed in order for the bond to mature. In other words, the electronic US savings bond is worth its full value upon its availability for redemption.

Denominations

Electronic EE bonds can be purchased in amounts starting from $25 up to any amount and to the penny. However, there is a limit to the amount of US savings bond you can purchase within one calendar year. The maximum is $30,000 and any purchase amounting to beyond that amount in one calendar year will not be honored.

Paper EE bonds are different. Because they are issued as paper bond certificates, they are available for purchase at set denominations, similar to real money. Paper US savings bond can be purchased in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000.

Interest on the US savings bond will accrue as soon as you purchase them, or as soon as they mature in the case of paper bonds. However, if you redeem the bonds in the first 5 years, you will not be entitled to the 3 most recent months’ interest.