How do I buy savings bonds?

Buying a U.S. savings bond today means opening a free account at TreasuryDirect.gov and purchasing an electronic Series EE or Series I bond directly from the Treasury. Paper savings bonds have not been sold at banks or other financial institutions since January 1, 2012, so TreasuryDirect is now the only way to buy a new bond. Series EE bonds sell at face value and earn a fixed rate, while Series I bonds sell at face value and earn a rate that adjusts for inflation. An individual can buy up to $10,000 face value of each series per calendar year, for a possible $20,000 total, and electronic bonds can be bought in any amount from $25 to $10,000 in penny increments. Both series are backed by the full faith and credit of the U.S. government, and both are affected by the same holding-period and early-redemption rules described below, according to Investor.gov's overview of savings bonds.

Opening a TreasuryDirect account

Every electronic savings bond purchase runs through TreasuryDirect, the Treasury's own retail platform for buying and holding its securities. The account holds the bonds directly in the buyer's name, linked to a bank account for the debit at purchase and for any later redemption. Because paper bonds stopped being issued at financial institutions in 2012, opening this account is now the starting point for anyone who wants a new EE or I bond rather than one already sitting in a drawer, per Investor.gov.

Choosing between Series EE and Series I

Series EE bonds are sold at face value — a $50 bond costs $50 — and the interest is credited electronically over the life of the bond rather than paid out along the way, with annual purchases capped at $10,000 face value; more detail is in TreasuryDirect's Series EE bond information. Series I bonds are also sold at face value and carry the same $10,000 annual cap, but their return combines a fixed rate with an inflation adjustment, described in TreasuryDirect's Series I bond information. Both series impose the same penalty for cashing in early: redeeming a bond within the first five years forfeits the three months of interest right before redemption, and there's no penalty at all once the bond has been held five years, per Investor.gov. Neither product decision is a recommendation one way or the other — which series fits a given purpose is a personal call, not something to take as investment advice.

Who can hold one, and what they're used for

Savings bonds can be bought as a gift for someone else, held by a minor in the minor's own name, used toward supplemental retirement income, or applied against qualified higher-education expenses. Interest is always exempt from state and local income tax, and federal tax on that interest can be deferred until the bond is redeemed or reaches final maturity, whichever comes first; taxpayers using bond proceeds for qualifying education costs may also be eligible for a separate tax exclusion, detailed in TreasuryDirect's guidance on the education tax exclusion. None of this is tax or investment advice for a specific situation — a tax professional can confirm how it applies to a particular return.

Next step

To actually buy a bond, open or log into an account at TreasuryDirect.gov, select Series EE or Series I, and enter the purchase amount within the $25-to-$10,000 annual limit per series. Someone who already holds paper bonds from before 2012 and wants to know what they're worth today should use TreasuryDirect's Savings Bond Calculator rather than guess, since value depends on the exact series, denomination, and issue date.