Savings Bond Definition

US savings bonds are treasury securities issued by the US Department of the Treasury through the Bureau of Public Debt. Savings bonds are available for purchase by the general public and are frequently offered through payroll deduction programs or through credit unions and some banks. Most individuals purchase either Series EE or a Series I savings bonds.

Series EE bonds are issued at one-half of their face value and reach final maturity in 30 years. Interest is paid semiannually and the bonds typically reach full face value in about 17 years. Interest is taxable at the federal level though it may be deferred until bond redemption. Series I bonds are issued at face value and have an adjustable yield which is intended to compensate for inflation. There are several limits on how many bonds may be purchased in a year and how the bonds may be redeemed.