Buy Savings Bonds Online

Until 2002 it was possible to buy paper US savings bonds online, but the Treasury Department discontinued this practice and now it is necessary to go directly into a bank or other financial institution to fill out and submit the appropriate paperwork. While you can still buy savings bonds online, they are electronic savings bonds that can be purchased directly from the US Treasury Department website. Currently there are two series of electronic savings bonds available. The first is the EE Savings Bond and the second is the I Savings Bond. The differences in the two series of bonds are in available denominations, purchase price, interest earnings, redemption and taxes. Both are eligible for tax-free education.

Series EE Savings Bonds
When you are looking to buy savings bonds online and are interested in series EE, you can get them in denominations of $50, $75, $100, $200, $500, $1000, $5000 and $10,000. The purchase price is 100% of the face value and the interest rates vary depending on the year they were purchased. EE Savings Bonds can be redeemed after 12 months but there will be a 3 month penalty on interest if they are redeemed before the 5 year mark. This series is exempt from local and state income tax and is tax deferred until it mature or is cashed in, whichever comes first. When they are cashed in, a 1099-INT is issued by the agent cashing in the bond. This series has varying maturity rules depending on the date of purchase. It is in your best interest to read the fine print and totally understanding their net worth prior to cashing them in.

Series I Savings Bonds
Similar to series EE Savings Bonds, I Savings Bonds also come in a variety of denominations. You can buy savings bonds online for of $50, $75, $100, $200, $500, $1000 and $5000 if they are I Savings Bonds. This particular savings bond has a fixed rate of return and the inflation rate is variable. They can also be redeemed after twelve months with the same stipulations/penalties as EE Savings Bonds. Taxes are assessed in exactly the same manner as the EE Savings Bonds as well. All series I bonds mature at the 30 year mark which means they stop earning interest. You should also understand what their net worth is (just like series EE) before you cash them in.

Conditions for Owning Savings Bonds
When you want to buy savings bonds online or even at a bank or financial institution, there are certain restrictions and conditions which must be met. First of all, you must be a resident of the United States or a US Citizen living abroad; however, these must have an address in the US on record. Also, if you are a civilian employee of the United States, regardless of residence you can buy savings bonds online. However, there is one aspect of savings bonds as investment products that is vastly different than other types such as securities, because minors can own US savings bonds. In fact, many parents and grandparents buy savings bonds online to invest in the future of their children/grandchildren.

The only time you may want a paper US savings bond is if you intend to give it as a gift. But even then, you might want to see if you can buy savings bonds online in the name of a family member or other recipient of the gift. Savings bonds are generally a stable investment if allowed to mature. They won’t yield extremely high profits but they are more secure than certain ventures.

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