Purchase A Savings Bond

Savings bonds issued by the U.S. Treasury. Since savings bonds are backed by the U.S. government, they are a low-risk, safe investment that are suitable as a savings investment for education. The principle and interest-earned are protected and cannot be lost due to changes in the market because savings bonds are not marketable securities. So if they are lost or stolen, they can be replaced at no cost to the investor.

When purchasing a savings bond, there are two types issued; Series I savings bonds and Series EE savings bonds. Series I bonds are bought at face value and are issued in denominations of $50, $75, $100, $200, $500, $ 1,000, $5,0000, and $10,000. Series EE bonds can be bought at half the face value of the bond and also can be purchased in the same denominations as Series I. Investors buying up savings bonds can purchase up to $30,000 at face value.

Savings bonds can earn interest up to 30 years after the date of issue. Series EE savings bonds can be redeemed after 6 months. However, if the bonds are redeemed within the first five years, there is a penalty that forfeits up to three months worth of interest. Series I savings bonds can also be redeemed after 6 months. Both series of savings bonds are exempt from state and local income tax and federal income tax can be deferred until the bond matures or is redeemed.

To purchase a savings bond, you can go to select financial institutes that participate. Not all banks deal in savings bonds so you might have to go to a larger bank. When purchasing a savings bond, the appropriate application must be filled out and certified at the bank. You will need your Social Security Number as there is a limit of how much each individual can purchase. Payment can be made through either a transfer of funds, cashier's check, or cash. After purchasing, it is a three week wait for the savings bond to arrive by mail. The savings bond can be redeemed after it matures or after the minimum amount of time has passed.