Updated September 2026. This guide first ran in 2011, when paper savings bonds were still sold at bank branches and Series EE bonds were bought at half of face value. Both of those rules ended on January 1, 2012. The figures below have been corrected to reflect how savings bonds actually work today: electronic only, sold at full face value, $10,000 per series per person per year, bought at TreasuryDirect.gov. Rates are reset every May 1 and November 1.
If you’re looking for a safe, easy way to start investing, U.S. Savings Bonds are the way to go. You can invest as little as $25 to start, and the annual purchase limit is $10,000 per series, per person, per calendar year in electronic bonds (so up to $10,000 in Series EE plus $10,000 in Series I). It is a great way to save, as Savings Bonds are free from all state and local income taxes and federal income taxes can be deferred if you wait until they reach final maturity before cashing them in.
U.S. Savings Bonds are non-marketable securities fully backed by the US government; therefore they will never lose their principle or interest due to fluctuating financial markets. Buy one for $50 it will never be worth less than $50. They are also a registered security meaning the person named on the bond owns them and they cannot be resold, only redeemed through a US Treasury designated agent.
There are two types of U.S. Savings Bonds available, the Series I and Series EE. They are categorized by the way in which they pay interest.
Series I bonds are inflation indexed. These bonds were created to protect the bond owner/investor from inflation. The interest rates are announced every May 1 and November 1st. When this guide was originally published, the Series I rate effective November 1, 2009 was 3.36% — that figure is historical, not current. Because the composite rate resets every six months, always check TreasuryDirect for the rate in effect before you buy. Electronic I bonds are no longer sold in fixed paper denominations; you can buy any amount from $25 to $10,000, to the penny.
I Bonds earn interest from the first day of the month they are issued and increase in value monthly, the interest is paid when redeemed. You can redeem them only after the 12 month holding period and can hold them up to 30 years.
Series EE bonds are low-risk and government-backed. You can use these bonds for financing education, supplemental retirement income, as gifts and other special events. The half-price rule described above applied to paper EE bonds, which were discontinued on January 1, 2012. Electronic EE bonds sold through TreasuryDirect today are purchased at full face value — pay $100 and you own a $100 bond — in any amount from $25 to $10,000, to the penny. The maximum is $10,000 in electronic Series EE bonds per person, per calendar year. Treasury guarantees an EE bond will be worth at least twice what you paid if you hold it for 20 years.
As with the Series I, the Series EE can mature and earn interest for up to 30 years. Series EE bonds have different rules depending upon when they were issued. For example, those bonds issued on or after May 1, 2005 will earn a fixed interest rate for 20 years at which time the bond will reach its face value. EE Bonds increase in value every month. Interest is compounded semiannually.
There are pros and cons to investing in Savings Bonds. Yes, they are a secured investment which cost you no state or local taxes but figuring maturity, interest rates, a bond’s current value and when to cash them in can be confusing. It is estimated that Americans forfeit $150 million annually by cashing in bonds at the wrong time. TreasuryDirect.gov offers a Savings Bond Calculator that lets you value paper savings bonds (the old savingsbonds.gov address now redirects there).
Banks and other financial institutions stopped selling paper savings bonds over the counter on January 1, 2012, so the branch route described above no longer exists. Today you buy savings bonds online at TreasuryDirect.gov, paying by ACH debit from a linked U.S. bank account. TreasuryDirect does not take credit cards. The one remaining paper option is Series I bonds bought with a federal tax refund.
Regardless of your reason for purchasing Savings Bonds it is a safe and profitable way to get started investing or to add to your established investment portfolio. For additional resources on U.S. Savings Bonds refer to the following sites:
• Savingsbonds.gov: A guide to savings bonds
• Sec.gov: Savings bonds types
• GSA.gov: About savings bonds
• Ustreas.gov: Introduction to savings bonds
• Investopedia.com: Series EE Bonds
• ibonds.info: What are I Bonds?
• ManagePersonalFinance.com: The pros and cons of bonds
• Kiplinger.com: How to buy savings bonds
• Savings-bond-advisor.com: How Series EE savings bond interest rates work
• SavingsBonds.com: Basic information about savings bonds
| Series EE | Series I | |
|---|---|---|
| How interest works | Fixed rate for the life of the bond; guaranteed to double in value at 20 years | Composite of a fixed rate plus a semiannual inflation rate |
| Rate reset | New fixed rate announced every May 1 and November 1 | Inflation component reset every May 1 and November 1 |
| Purchase price | Full face value | Full face value |
| Purchase amounts | $25 to $10,000, to the penny | $25 to $10,000, to the penny |
| Annual limit (electronic) | $10,000 per person | $10,000 per person |
| Paper still available? | No | Only via federal tax refund |
| Minimum holding period | 12 months | 12 months |
| Early redemption penalty | Forfeit last 3 months of interest if cashed before 5 years | Forfeit last 3 months of interest if cashed before 5 years |
| Maximum term | 30 years | 30 years |
| State and local income tax | Exempt | Exempt |
Source: U.S. Treasury / TreasuryDirect. Rates and limits are set by Treasury and can change — confirm current figures before purchasing.
Savings bonds are the opposite of a day trade. They cannot be sold, only redeemed; they are locked up for at least 12 months; and they carry a three-month interest penalty inside the first five years. That makes them a place to park capital you have deliberately decided not to trade — an emergency fund, or the portion of savings that should never be exposed to a drawdown — rather than a market instrument.
The practical use for a trader is boring but real: savings bonds keep your non-risk capital out of reach during a losing streak. Traders who blur the line between trading capital and savings tend to size up to recover losses, which is where accounts actually die. If you want to understand how position size and drawdown interact before you fund an account, work through risk and reward and trading psychology first.
If your interest is in trading interest-rate and commodity markets rather than holding government paper, futures are the more direct route — see our guides to Dow futures, Nasdaq 100 futures and micro futures contracts.
No. That rule applied to paper EE bonds, which Treasury stopped selling on January 1, 2012. Electronic EE bonds bought through TreasuryDirect are purchased at full face value, in any amount from $25 to $10,000.
$10,000 in electronic Series EE bonds and $10,000 in electronic Series I bonds per person, per calendar year. An additional amount of paper Series I bonds can be purchased with a federal tax refund.
No. Over-the-counter sales of paper savings bonds at banks and credit unions ended January 1, 2012. Purchases are made online at TreasuryDirect.gov.
No. TreasuryDirect funds purchases by ACH debit from a linked U.S. bank account.
Series EE bonds pay a fixed rate and are guaranteed by Treasury to be worth at least double the purchase price after 20 years. Series I bonds pay a composite rate that combines a fixed rate with a semiannual inflation adjustment, so they track inflation rather than promising a set doubling date.