- Savings bonds were first issued in 1935 during the Great Depression and were known as "baby bonds" due to their short maturity dates (ten years). Bonds labeled Series A, B, C or D are baby bonds.
Series E, F and G bonds were sold during World War II and often referred to as "war bonds." Series F and G bonds were 12-year bonds and were phased out in the early 1950s. Series E bonds were longer in term, usually 30 to 40 years.
Series H bonds appeared in 1952 to coincide with the phase out of Series F and G bonds. Series H bonds had longer maturity terms like Series E bonds, but they paid out interest every six months. Series H bonds were replaced by Series HH bonds in the 1970s and then were phased out in 2004.
- Currently, there are two types of savings bonds available for purchase: Series EE and Series I.
Series EE bonds replaced the Series E bonds in the 1970s. Like their predecessors, Series EE bonds have long maturity dates of 30 to 40 years. Series EE bonds currently accrue interest at a fixed rate that is payable upon redemption.
The Treasury began issuing a new type of savings bond---the Series I---in 1998. This bond has a two-part yield consisting of a fixed interest rate and a variable inflation-adjustment rate. The inflation adjustment is calculated every six months.
- Savings bonds are essentially loans to the U.S. Government. They appeal to most consumers because they are secure (they are backed by the government), and they usually pay a higher interest rate than bank savings accounts or certificates of deposit (CDs).
As a security, a savings bonds functions most like a bank CD. They are set with an interest rate and held to maturity. They are not an open-market traded security, and if they are redeemed too early there may be a penalty.
- Savings bonds are valued by adding the face value of the bond to the accrued interest. For most contemporary bonds, this is fairly simple. Older bonds may be more difficult, especially those past their maturity dates or those with variable interest rates.
The U.S. Department of the Treasury maintains a database of all savings bonds and has a free calculator you can use to look up the value of your bond (see Resources). Be aware that if your bond is old and rare (Series F and Series G, especially), it may be worth more as a collector's item than as an actual bond.
Purchase and Redemption
- You can purchase Series EE and Series I savings bonds from the U.S. Department of the Treasury itself, either online or by mail (see Resources). You can also purchase these bonds from most banks and credit unions. You cannot purchase more than $5,000 worth of either type of bond in a year.
You can redeem Series EE and Series I bonds at your local bank, credit union, or through the U.S. Department of the Treasury. Your bond must be at least 12 months old, and you cannot redeem more than $1,000 at a time. Other bonds must be redeemed through your local Treasury Retail Securities Site. These offices will supply you with a list of the documentation you will need to redeem older bonds. TreasuryDirect.gov maintains a list of all Treasury Retail Security Sites (see Resources).