US Savings Bonds Basics

US Savings bonds are a secure way to invest your money for fail-safe revenue with backing provided by the government. Not only are these excused from local and state taxation, but these are also not subject to redemption tax as long as you do not redeem them within the first five years of purchase.

The profit you could gain is very substantial. Effective last November 1, 2008, the US Treasury declared the interest rates for bonds. For EE bonds, those bought between November 2008 and April 2009, the interest rate is 1.3%. For those bought between May 1997 and April 2007, the interest rate applied is 90% of the average 5-year US Treasury securities gains for the past six months. For those bought earlier than May 1997, the interest rate is different depending on when the bond was issued. For I bonds, 5.64% interest rate is applied to bonds acquired from November 2008 through April 2009. This rate is also applied for the first six months of the bonds acquired. After that period, a fixed interest rate of 70% will be applied for the life of the bond for up to 30 years.

Purchasing a US savings bond requires you to have a social security number and either be a resident of the United States or an American citizen living abroad. All civilian employees, regardless of their place of residence, are eligible to purchase a savings bond. Even minors are eligible.

For anyone planning to purchase US savings bonds, paper bonds are available in most financial institutions. For electronic bonds, you can acquire these online at Treasury Direct.