US Savings Bonds: What They Are and How They Work

For as long as most people can remember, US Savings Bonds have been a safe and reliable place to save money. While they may not offer the growth potential of stock market investments, there is very little risk involved, and compared to a traditional savings account, US savings bonds rank among the safest savings tools available.

Unlike savings accounts held at financial institutions that are insured by the FDIC, savings bonds are backed directly by the United States government. Popular as gifts for children, students, and family members, savings bonds are worth understanding, both for those considering purchasing them and for those who have received them and want to know how to redeem them.

This guide covers what US savings bonds are, the different types available, current rates, and how to cash them in.

What Are US Savings Bonds?

United States Savings Bonds are a type of government debt issued by the US Department of Treasury through the Bureau of the Fiscal Service. When you buy a savings bond, you are essentially lending money to the US Treasury, with the promise that it will repay you with interest.

US savings bonds are considered among the most secure bonds in the world. They are unmarketable securities issued to subscribers and cannot be transferred through market sales, meaning you cannot sell them to another investor the way you can sell stocks or Treasury bonds.

The broader category of US government debt includes Treasury Bills, Treasury Notes, Treasury Bonds, and Treasury Inflation-Protected Securities (TIPS), all commonly referred to as Treasuries.

Types of US Savings Bonds

There are three main types of US savings bonds worth understanding:

US Treasury Bonds

Treasury Bonds have a 30-year term and pay a fixed rate of interest on a six-month basis until they mature. The owner receives the bond’s face value at maturity. Unlike savings bonds, Treasury Bonds may be held until maturity or sold on the secondary market prior to maturity. You can purchase Treasury Bonds directly from TreasuryDirect.gov. The minimum purchase is $100, and the maximum is $5 million.

Series I Savings Bonds

Series I Savings Bonds are low-risk savings bonds that earn interest and protect purchasing power against inflation. The interest rate has two components: a fixed rate that stays the same for the life of the bond and an inflation rate that adjusts every six months based on the Consumer Price Index.

The current composite rate for I Bonds issued May 2026 through October 2026 is 4.26%, combining a 0.90% fixed rate with the 3.34% annualized inflation rate. Rates reset every six months on May 1 and November 1. Always check TreasuryDirect.gov for the most current rate before purchasing.

You can purchase I Savings Bonds from TreasuryDirect.gov and at most local financial institutions. The minimum purchase for a paper bond is $50, and $25 when purchased electronically. The maximum purchase in a calendar year is $10,000 per person.

Series EE Savings Bonds

Series EE Savings Bonds are safe, low-risk savings bonds that earn a fixed rate of interest for the first 20 years after issuance. They are guaranteed to double in value at 20 years, even if the published rate would not otherwise produce that result. This guarantee means that, while the published rate may appear modest, the effective long-term rate for bonds held to maturity of 20 years is approximately 3.6%.

Series EE bonds issued from May 2026 through October 2026 earn a fixed annual rate of 2.40%. Rates are updated every May 1 and November 1. Always check TreasuryDirect.gov for the most current rate before purchasing.

You can purchase Series EE bonds from TreasuryDirect.gov or most financial institutions. Some employers also offer the option to purchase savings bonds directly through payroll deductions. The minimum purchase for a paper bond is $25, and the maximum purchase in a calendar year is $10,000 electronically, plus up to $5,000 in paper bonds purchased with a tax refund.

Are US Savings Bonds a Good Investment or Gift?

Savings bonds can be a good investment for those with the time and patience to let them fully mature. When purchased in advance, they work well for retirement planning, saving for education, and giving as gifts for children.

Savings bonds make excellent gifts for birthdays, weddings, graduations, and celebrating a birth. You can buy a bond for someone in either electronic or paper form. You must be 18 or older to purchase a bond electronically, but recipients of any age can own a bond.

To gift a bond electronically, you need the recipient’s full name, Social Security number, and TreasuryDirect account number. If purchasing at a financial institution, you will fill out their form and typically receive the paper bond within about three weeks, which can be mailed to you or directly to the recipient.

Best Alternatives to US Savings Bonds

If you are looking for alternatives to US savings bonds with potentially higher returns, here are two options worth considering:

High-Yield Savings Accounts

High-yield savings accounts are currently offering up to 5.00% APY with full FDIC protection, making them a competitive alternative to savings bonds for short-term cash that you may need to access before a bond’s one-year minimum holding period. Unlike savings bonds, high-yield savings accounts offer full liquidity with no early withdrawal penalty.

Bond ETFs

Exchange-traded funds focused on bonds allow you to invest in a diversified basket of bonds rather than a single bond. Bond ETFs trade on the stock market just like a stock and can be purchased on a commission-free basis from many major brokerages including Morgan Stanley E*Trade, Charles Schwab, and Ally Invest. Bond ETFs offer more liquidity than individual savings bonds and can be bought and sold at any time during market hours.

How Much Are US Savings Bonds Worth?

There are several ways to determine the current value of your savings bonds. The most accurate and widely used tool is the Savings Bond Calculator available on TreasuryDirect.gov, brought to you by the US Department of Treasury Bureau of the Fiscal Service. You can also take your bonds to a local bank to have their current value determined.

Regardless of which method you use, you will need to have the actual bond information, series, denomination, serial number, and issue date, available to get an accurate calculation. The TreasuryDirect website allows you to save bond information in your own inventory for future reference.

Where Can You Redeem US Savings Bonds?

Most financial institutions, banks and credit unions, can handle the redemption of US savings bonds. Contact your local bank before bringing bonds in for redemption to confirm they handle this type of transaction and to ask what documentation is required.

You will be asked to show a valid ID to prove ownership. If the bond is not in your name, you will need to provide proof that you are the rightful heir or owner.

Electronic bonds purchased through TreasuryDirect.gov can be redeemed by logging into the website and following the on-screen directions. Once redeemed, you can expect a credit in your checking or savings account within one business day.

What to Know Before Cashing In US Savings Bonds

Minimum holding period. Savings bonds must be held for at least one year before they can be cashed in.

Early redemption penalty. Redeeming a savings bond before it is five years old will result in the forfeiture of three months of interest earned prior to redemption.

Taxes. Savings bonds are subject to federal income tax on interest earned. They are exempt from state and local taxes. Bond owners can choose to defer interest reporting until the bond is redeemed or report interest annually as it accrues.

Non-transferability. Savings bonds are non-transferable, which creates some special considerations:

• Minor children. Minor children who are old enough to understand and sign for redemption can do so with valid identification. Bonds issued to children too young to participate in the redemption process may be cashed in by a parent or legal guardian.

• Power of Attorney. Individuals who have Power of Attorney for someone unable to represent themselves can request a special form from the Treasury to handle redemption.

• Inheritance. Beneficiaries who inherit savings bonds must present evidence that proves they are the rightful owner along with a certified copy of the death certificate.

• Living outside the US. Individuals living outside the United States can visit TreasuryDirect.gov for detailed instructions on redeeming bonds under various circumstances.

Should You Invest in US Savings Bonds?

US savings bonds remain one of the safest investment options available, backed by the full faith and credit of the US government with no risk of default. While they may not offer the highest returns compared to equities or real estate, they serve an important role in a diversified savings strategy, particularly for conservative savers, gift-giving, and inflation protection through I Bonds.

For military members, I Bonds can be an especially useful tool for parking emergency fund money that needs to keep pace with inflation, with the added benefit of state and local tax exemption on interest earned.