SAVINGS BOND

Savings bonds are debt securities issued by the U.S. Department of the Treasury sold in any bank, credit union, or S&L or even online through TreasuryDirect, a dedicated website for bond investors. Savings bonds are registered at the Treasury’s Bureau of the Public Debt and cannot be traded in the secondary market. U.S. savings bonds have tax advantages (it is possible to defer federal taxes, state and local taxes). In case of loss, destruction or theft, the U.S. Treasury’s Bureau of the Public Debt provides the replacement of the savings bonds registered. There are three series of savings bonds: I, EE and HH. Series I and EE Bonds pay interest for 30 years. The original investment plus all of the interest are paid at the maturity date and must be held for at least one year, and if they are sold within five years of purchase they are subject to a deduction of three months of interest. Series EE Bonds earn a fixed interest rate and are at a discount of half their face value. Series I interest rate is composed of a fixed part plus an inflation-indexed part and these bonds are sold at face value. For both series, there is a purchase limit referred to any calendar year, fixed at $5,000. Eight denominations are admitted (50, 75, 100, 200, 500, 1,000, 5,000 and 10,000 USD). Series HH Bonds are current-income securities no more available (from September 1, 2004). They earn a fixed interest rate set on the day the bond was purchased every six months until maturity (20 years) or redemption. On the tenth anniversary of the issue date, the interest rate changes to the current HH Bond rate. They can be purchased only in exchange for Series EE or E Bonds and Savings Notes, or with the proceeds from a matured Series HH Bond, at their face amount in $500 to $10,000 denominations. There is no limit on the purchase of HH savings bonds and the required holding period is of at least six months. 

Editor: Bianca GIANNINI
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