Where to buy savings bonds

You buy savings bonds directly from the U.S. Department of the Treasury through TreasuryDirect, their online platform. You cannot buy them from a bank, broker, or financial advisor. TreasuryDirect is the only place to purchase new bonds from the government.

You can also buy Series I bonds and Series EE bonds through your employer's payroll savings plan if your company offers one, though this is less common. The process is the same — the money goes to TreasuryDirect on your behalf.

If you want to buy bonds that someone else already owns, you can do that through a broker or bank, but those are secondary market bonds and work differently from new purchases. This guide covers buying new bonds directly.

Key Takeaways

  • You must create a TreasuryDirect account with a Social Security number or tax ID, a valid email address, and a U.S. bank account.
  • Series I bonds and Series EE bonds are the two main types; I bonds protect against inflation and EE bonds earn a fixed rate, and you choose which one to buy.
  • You can buy as little as $25 per bond, but TreasuryDirect charges a one-time $25 account setup fee that reduces your first purchase.
  • Bonds are held electronically in your TreasuryDirect account and cannot be printed or mailed to you.
  • You must hold a bond for at least one year before you can cash it in, and you lose the last three months of interest if you cash it before five years.

Setting up your TreasuryDirect account

Go to treasurydirect.gov and click "Open an Account." You will need a Social Security number or Individual Taxpayer Identification Number (ITIN), a valid email address, and a U.S. bank account. The bank account is where money will be withdrawn when you buy bonds and where redemption money will be deposited when you cash them in.

You will create a username and password, answer security questions, and verify your email address. The Treasury will also verify your identity by checking your information against government records. This process usually takes a few minutes, though verification can take up to a business day.

Once your account is open, you will be charged a one-time $25 account setup fee. This fee is deducted from your first bond purchase, so if you buy a $25 bond, the fee will consume the entire purchase and you will own no bonds until you buy again.

Choosing between Series I and Series EE bonds

Series I bonds earn interest in two parts: a fixed rate set by the Treasury, plus an inflation rate that changes every six months. The inflation part adjusts based on the Consumer Price Index (CPI). If inflation is high, your I bond earns more. If inflation is low or negative, your I bond still earns the fixed rate. I bonds are useful if you want protection against rising prices.

Series EE bonds earn a fixed interest rate set by the Treasury when you buy them. That rate stays the same for the life of the bond. EE bonds are simpler to understand but do not adjust if inflation rises. The Treasury guarantees that an EE bond will double in value in 20 years, even if the interest rate is very low.

You can buy both types in the same account. Many people buy I bonds when they are worried about inflation and EE bonds when they want predictability. Check the current rates on TreasuryDirect before you decide — rates change every six months for I bonds and are updated regularly for EE bonds.

Making your purchase

Log into your TreasuryDirect account and select "Buy Direct." Choose the bond type (I or EE), the amount you want to buy, and the purchase date. You can buy bonds 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 one type in a single year, you cannot do it through TreasuryDirect.

You can also buy up to $5,000 in paper Series I bonds per year using your federal tax refund. This is done through your tax return, not through TreasuryDirect, and the bonds are mailed to you. Paper bonds are less common now and work differently from electronic bonds.

Review your purchase details, confirm the bank account the money will be withdrawn from, and submit. The Treasury will withdraw the money from your account within a few business days. Your bonds will appear in your TreasuryDirect account as electronic entries — you will not receive a certificate or physical bond.

How bonds are held and tracked

All bonds purchased through TreasuryDirect are held electronically. You will see them listed in your account with the purchase date, amount, current value, and interest earned. You can check your account anytime to see how much your bonds are worth.

The Treasury sends you an annual statement showing all transactions and current values. You can also download statements from your account whenever you need them. If you lose access to your account, you can recover it using your email and security questions, or contact TreasuryDirect customer service.

Bonds are insured by the federal government, so there is no risk of losing your money if TreasuryDirect has a problem. Your bonds are backed by the full faith and credit of the United States.

When you can cash in your bonds

You must hold a bond for at least one year before you can cash it in. If you try to redeem it before one year has passed, TreasuryDirect will not allow it. After one year, you can cash in any bond anytime through your account.

If you cash in a bond before it has been held for five years, you lose the last three months of interest. For example, if you buy a bond in January and cash it in March of the following year (14 months later), you will receive interest only through December — the three months of interest from January through March of year two will be forfeited. After five years, you can cash in without losing any interest.

When you redeem a bond, the money is deposited into your bank account within a few business days. You will receive the full purchase price plus all earned interest, minus any penalty if you cashed in before five years.

Tax considerations

Interest earned on savings bonds is subject to federal income tax. You do not pay tax when you buy the bond or when it earns interest — you pay tax when you cash it in. At that time, you report the total interest earned on your tax return for that year.

You can choose to report interest every year instead of waiting until you cash in the bond, but most people wait. If you do wait, keep records of when you bought each bond and how much you paid, so you can calculate the interest correctly when you redeem.

Savings bonds are not subject to state or local income tax, only federal tax. 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 federal tax, but this has income limits and other requirements.

Frequently Asked Questions

Can I buy savings bonds for someone else?

You can buy bonds in your own name only through TreasuryDirect. If you want to give bonds as a gift, you can buy them in your name and then transfer them to the recipient after purchase, though this requires paperwork and the recipient must have a TreasuryDirect account. Some people buy paper Series I bonds using their tax refund and give those as gifts, since paper bonds can be transferred more easily.

What happens if I need my money before one year?

You cannot cash in a savings bond before one year has passed. If you need the money sooner, you will have to use a different savings method. This is why savings bonds work best for money you know you will not need for at least a year.

Can I lose money on a savings bond?

You cannot lose the principal amount you invested. Your bond will always be worth at least what you paid for it. The only way you earn less than expected is if you cash in before five years and lose the last three months of interest, but you still get back your full purchase price.

Do I need to do anything to keep my bonds active?

No. Once you buy a bond through TreasuryDirect, it earns interest automatically. You do not need to renew it, make payments, or take any action. The bond will continue earning interest until you decide to cash it in or until it reaches final maturity (usually 30 years after purchase).

What if I forget my TreasuryDirect password?

You can reset your password using your email address and security questions. If you cannot access your email, contact TreasuryDirect customer service by phone or through their website. They can verify your identity and help you regain access to your account.