What Is a US Savings Bond?

United States savings bonds are a type of federally issued debt instrument that you can purchase directly from the Treasury or from banks around the nation. Savings bonds are conservative instruments on which you can earn interest for up to 30 years. As of 2011, savings bonds are issued in two varieties: EE bonds and I bonds.

Buying Bonds

You can buy savings bonds for yourself or for someone else. If you buy electronic bonds online, you do not receive a paper bond certificate and the bonds are held in an online account. If you buy a bond for someone else, you store it in an online "gift box." When you buy bonds, you must provide the Treasury department or the bank selling the bonds with the name and the Social Security number of the bond owner. If you are buying a bond for someone else and do not know that person's Social Security number, you can use your own and you will not incur any tax liability. If you buy paper bonds from a bank, you receive your bonds in the mail and each bond shows the owner's name and Social Security number.

EE Bonds

EE bonds cost 50 percent of the face value, but you receive the full face value if you wait to redeem your bond until it reaches maturity. The time it takes a bond to reach maturity depends on the interest rate being paid at the time you make your purchase, but typically bonds mature in 12 years. You can buy bonds with face values ranging from $50 to $10,000 but you cannot spend more than $5,000 on the bonds in a single calendar year.

I Bonds

I bonds are sold in increments ranging from $50 to $5,000, and as with EE bonds you can spend no more than $5,000 on I bonds in a single calendar year. You must pay the face value of the bond when you buy an I bond and you receive a return of premium at maturity. Interest rates on I bonds are based on two different factors: a fixed rate that lasts for the entire term of the bond and an inflation-adjusted rate that changes twice a year. You receive a return composed of both these rates.


You cannot sell EE bonds or I bonds and if you die the bonds become the property of your estate. You can jointly own a bond with another person, in which case the surviving owner assumes full control of the bond if the other owner dies. You cannot redeem a bond within 12 months of purchase. If you redeem an EE or I bond within five years of purchase you pay a penalty equal to three months of interest.