Savings bonds are a medium to long term debt instrument issued by the government to raise money for infrastructure or other federal programs. Most treasury bonds that have been issued are of a maturities range of 1 year to 20 years. A debt instrument is a document that is legally enforceable evidence of a debt and the promise of its timely repayment such as bonds, certificates of deposit, debentures, and promissory notes.
U.S. Savings bonds are offered as Series EE bonds or Series I Bonds. Series EE bonds are purchased at a discount of fifty percent of their face value. Their sale is limited to $5,000 per person per calendar year. Series EE bonds increase in value as the interest they accrues adds to the total every year. At the maturity date of the bond, the purchaser gets back the original price of the bonds plus all the interest. Series I bonds are sold at face value and their value increases at a fixed rated, plus an inflation-indexed rate for the life of the bond. Their sale is also limited to $5,000 per person per calendar year.
U.S. Savings bonds are very simple to buy in person or online. Anyone can buy a U.S. Savings bond by going to their local bank or credit union; the purchaser will be required to fill out a form and to pay the cashier, then the bond will be sent through the mail after two to three weeks.
Purchasing bonds online is a little more complex. The purchaser must use a computer that supports a 128-bit encryption; they must have a verifiable email address; they must have a social security and a driver's license or state ID; they must have a bank account through which the payments can be linked.
There is one other way to purchase U.S. Savings bonds. An employee can purchase the bonds through his employer if the employer is enrolled in the Payroll Savings Plan for U.S. Savings Bonds. The amount that the employee chooses will be deducted automatically from each paycheck and deposited into a federal account. When enough money has accumulated to buy the bond desired, the bond will be sent to the owner.