Yes, you can still buy savings bonds, but only through TreasuryDirect

The U.S. Treasury still issues savings bonds, but you cannot buy them at a bank or through a broker anymore. Since January 2012, the only way to purchase new savings bonds is through TreasuryDirect, the Treasury's online platform. You create an account, link a bank account, and buy bonds directly from the federal government at treasurydirect.gov.

The two types available now are Series EE bonds and Series I bonds. EE bonds earn a fixed interest rate set by the Treasury. I bonds earn a combined rate: a fixed portion plus an inflation rate that changes every six months. Both require a minimum purchase of $25 and can be held for up to 30 years.

If you own older paper bonds issued before 2012, you still own them and they continue to earn interest. You do not have to do anything with them. But if you want to buy new ones, TreasuryDirect is your only option.

Key Takeaways

  • New savings bonds are sold only through TreasuryDirect at treasurydirect.gov; banks and brokers no longer sell them.
  • You need a Social Security number, a valid email address, and a U.S. bank account to open a TreasuryDirect account and buy bonds.
  • Series EE bonds pay a fixed rate; Series I bonds pay a fixed rate plus an inflation adjustment that updates twice a year.
  • Bonds purchased through TreasuryDirect are held in electronic form only — there are no paper certificates issued anymore.
  • You can redeem bonds online through TreasuryDirect after holding them for at least one year, though you lose the last three months of interest if you cash out before five years.

Setting up a TreasuryDirect account

Creating an account takes about 15 minutes and requires your Social Security number, a valid email address, and online access to a U.S. bank account. You will need to verify your identity through a process that may involve answering security questions or receiving a code by mail. The Treasury uses this step to prevent fraud.

Once your account is active, you link your bank account for purchases and redemptions. You can buy bonds as often as you want, in any amount from $25 up to $10,000 per bond type per calendar year. If you want to buy more than $10,000 in a single type in one year, you can do so through a payroll savings plan (if your employer offers one) or by having someone else buy bonds registered in their name.

The difference between Series EE and Series I bonds

Series EE bonds pay a fixed interest rate that the Treasury sets every six months. That rate stays the same for the entire 30-year life of the bond. The current rate is posted on treasurydirect.gov and changes on May 1 and November 1 each year. If you buy an EE bond, you know exactly what return you will earn.

Series I bonds are designed to protect against inflation. They earn a combined rate made up of two parts: a fixed rate (which never changes) plus an inflation rate that adjusts every six months based on the Consumer Price Index. The inflation portion can go up or down, so your total return changes twice a year. I bonds are often chosen by people worried that inflation will erode the value of their savings.

Both types are backed by the full faith and credit of the U.S. government, so there is no risk of losing your principal. The trade-off is that both earn less than many other investments, and you cannot access your money without penalty for the first year.

Buying and holding bonds through TreasuryDirect

Once your account is set up, buying a bond takes a few clicks. You choose the type (EE or I), the amount, and whether you want it registered in your name only or in co-ownership with someone else. The Treasury deducts the purchase price from your linked bank account, usually within one business day. The bond appears in your account immediately and begins earning interest right away.

Bonds are held electronically in your TreasuryDirect account. There are no paper certificates mailed to you. You can view your bonds, track their value, and manage them entirely online. If you lose access to your account, you can recover it using your email and Social Security number.

You can hold bonds for up to 30 years. Many people hold them longer than they need to because the interest keeps compounding. You do not have to do anything to keep a bond active — it will continue earning interest as long as your TreasuryDirect account exists.

When and how to cash in your bonds

You can redeem a bond online through TreasuryDirect after holding it for at least one year. If you cash it in before five years have passed, you lose the last three months of interest as a penalty. After five years, you can redeem without any penalty.

The redemption process is straightforward: you log into your account, select the bond, and request the redemption. The Treasury deposits the money into your linked bank account within a few business days. You will receive a 1099-INT form at tax time showing the interest you earned.

If you need money before the one-year mark, you cannot redeem the bond. This is one reason bonds work best for money you do not plan to touch for at least a year or two.

Tax treatment of savings bond interest

Interest earned on savings bonds is subject to federal income tax, but it is exempt from state and local income tax. You have two choices about when to report the interest: you can report it each year as it accrues (even though you have not received the money yet), or you can wait and report all the interest when you redeem the bond.

Most people choose to report the interest when they cash in the bond, since that is simpler. The Treasury will send you a 1099-INT form showing how much interest you earned. If you redeem bonds in the same year you buy them, you may owe tax on the interest even though you have not held the bond for a full year.

If you use bond proceeds to pay for may have access to education expenses, you may be able to exclude some or all of the interest from your taxable income, but this requires meeting specific conditions and filing Form 8815 with your tax return. A tax professional can help you determine whether you may have access to.

Older paper bonds and what happened to them

If you own paper savings bonds issued before 2012, they are still valid and still earning interest. You do not have to convert them or do anything with them. They will continue to earn interest for up to 30 years from their issue date, and some older bonds may still be earning interest even after 30 years if they were issued before certain dates.

You can redeem paper bonds at most banks, credit unions, or through the Treasury's Savings Bond Calculator at treasurydirect.gov, which tells you the current value of your bonds. If you want to check on bonds you own but cannot find, the Treasury has a search tool called SmartExchange that can help locate them.

Paper bonds cannot be replaced with electronic versions in TreasuryDirect. If you want to move to electronic bonds, you would need to cash in the paper bonds and use the proceeds to buy new electronic bonds through TreasuryDirect.

Frequently Asked Questions

Can I buy savings bonds as a gift for someone else?

Yes. You can buy a bond registered in someone else's name or as co-owned with another person. The person whose name is on the bond will need to provide their Social Security number during the purchase. They do not need their own TreasuryDirect account to receive the gift, but they will need one if they want to redeem it later.

What is the minimum and maximum I can buy?

The minimum purchase is $25 per bond. You can buy up to $10,000 per bond type (EE or I) per calendar year through TreasuryDirect. If you have access to a payroll savings plan through your employer, you can buy additional bonds that way and exceed the $10,000 limit.

Do savings bonds earn interest if I do not cash them in?

Yes. Interest compounds semiannually for the entire 30-year life of the bond. You do not have to do anything to earn it — it accrues automatically. If you never redeem the bond, the interest keeps building, though after 30 years the bond stops earning new interest.

Can I lose money on a savings bond?

No. Your principal is may provide by the U.S. government. The worst outcome is that you earn very little interest if rates are low, but you will never get back less than you put in. The only cost is the three-month interest penalty if you redeem before five years.

What happens if I forget about a bond I bought?

Your bond will continue to exist in your TreasuryDirect account and keep earning interest. You can log in anytime to check on it. If you lose access to your account, you can recover it using your email and Social Security number. The Treasury does not close accounts or expire bonds.