Where and how to buy savings bonds

You buy U.S. savings bonds directly from the U.S. Department of the Treasury through TreasuryDirect, an online platform at treasurydirect.gov. You do not buy them through a bank, broker, or financial advisor — the Treasury sells them directly to you, which is why the process is free and the interest rates are set by the government rather than negotiated.

You have two main routes: open an account on TreasuryDirect and buy online, or buy paper bonds through your employer's payroll savings plan if your company offers one. The online route is faster and gives you when ready access to your account. The payroll route lets you set aside money automatically from each paycheck, which some people find easier than making a separate purchase.

You can also buy savings bonds as a gift for someone else, but you will need their Social Security number and they will need to accept the bond through their own TreasuryDirect account before it becomes theirs.

Key Takeaways

  • TreasuryDirect at treasurydirect.gov is the only place to buy new savings bonds directly from the Treasury, and you need a free online account to purchase them.
  • You can buy Series EE bonds and Series I bonds online; the minimum purchase is $25 and you can buy up to $10,000 per bond type per calendar year.
  • Series I bonds protect against inflation and currently pay a rate that changes every six months, while Series EE bonds pay a fixed rate for the life of the bond.
  • Your money is locked in for at least one year, and you lose the last three months of interest if you cash out before five years have passed.
  • Payroll savings plans through your employer let you buy bonds automatically from each paycheck, though fewer companies offer this option than they once did.

Setting up a TreasuryDirect account

Go to treasurydirect.gov and click "Open an Account." You will need your Social Security number, a valid email address, and a U.S. bank account (checking or savings). The Treasury uses your bank account to withdraw money when you buy bonds and to deposit money when bonds mature or you cash them out.

The account setup takes about 15 minutes. You will create a username and password, verify your email, and link your bank account. The Treasury will make two small test deposits to your bank account — usually within one to two business days — and you will need to log back into TreasuryDirect and confirm the amounts to prove you control that account. This verification step protects your account from fraud.

Once your account is verified, you can buy bonds when ready. You do not need to wait for anything else to happen.

Choosing between Series EE and Series I bonds

Series I bonds are designed to protect you against inflation. The interest rate has two parts: a fixed rate set by the Treasury (which does not change for the life of the bond) and an inflation rate that adjusts every six months based on the Consumer Price Index. Right now, the combined rate changes on May 1 and November 1 each year. If inflation drops, your rate can drop too, but it will never go below the fixed portion.

Series EE bonds pay a fixed interest rate for the entire time you own them. The rate is set when you buy the bond and stays the same whether inflation rises or falls. Series EE bonds also have a special feature: if the bond's value doubles before 20 years have passed, the Treasury guarantees it will be worth at least double your purchase price at the 20-year mark.

Most people choose Series I bonds when inflation is high and they want protection against rising prices. Series EE bonds make sense if you expect inflation to stay low or if you want the certainty of knowing your exact return from day one. You can own both types at the same time.

Purchase limits and minimum amounts

The minimum purchase for any savings bond is $25. You can buy bonds in any amount above that — $25.50, $100, $500, whatever you want — up to the annual limit.

The annual limit is $10,000 per bond type per calendar year. That means you can buy up to $10,000 in Series EE bonds and up to $10,000 in Series I bonds between January 1 and December 31. If you buy $10,000 in Series I bonds in March, you cannot buy any more Series I bonds that year, but you can still buy up to $10,000 in Series EE bonds.

If you also buy paper bonds through a payroll savings plan, those count toward your annual limit too. Paper bonds purchased through payroll are limited to $5,000 per bond type per year, and that $5,000 counts against your $10,000 online limit.

What happens after you buy a bond

Once you complete your purchase on TreasuryDirect, the bond appears in your account when ready. You can see the purchase date, the interest rate, and the current value. The bond begins earning interest right away.

Your money is locked in for at least one year — you cannot cash the bond out during that first year under any circumstance. After one year, you can cash it out anytime, but if you do so before five years have passed, you lose the last three months of interest as a penalty. After five years, you can cash out without any penalty.

The bond continues to earn interest for 30 years (Series EE) or 30 years (Series I), at which point it stops earning interest and you should cash it out. You can hold it longer if you want, but it will not grow.

Buying bonds through payroll deduction

If your employer offers a payroll savings plan, you can arrange to have money taken from each paycheck and used to buy savings bonds. You fill out a form with your employer's benefits department, choose how much to deduct per paycheck, and specify whether you want Series EE or Series I bonds.

The bonds are issued in your name and sent to you, usually every quarter or every six months depending on your employer's schedule. You will receive paper certificates or instructions to claim them in a TreasuryDirect account.

Fewer employers offer this benefit than they did 20 years ago, so check with your HR or benefits department to see if your company participates. If it does, this is a painless way to build a bond habit without thinking about it.

Tax treatment of savings bond interest

The interest you earn on savings bonds is subject to federal income tax, but not to state or local income tax. You have a choice about when to report the interest: you can report it every year as it accrues, or you can wait and report all of it in the year you cash the bond out or it matures.

Most people choose to report it all at the end because it is simpler — you get one tax form (Form 1099-INT) when you cash out, and you report that amount on your tax return. If you report interest every year instead, you will need to calculate the accrued interest yourself each year, which is more work.

If you use the bond proceeds to pay for may have access to education expenses (tuition and fees at an accredited school), you may be able to exclude some or all of the interest from your taxable income. This is called the Education Savings Bond Program, and it has income limits and other rules. Talk to a tax professional if you think this applies to you.

Frequently Asked Questions

Can I buy savings bonds for someone else as a gift?

Yes, but the process is different from buying for yourself. You buy the bond in your TreasuryDirect account, but you register it in the other person's name. They will receive a notification and must accept the bond through their own TreasuryDirect account. Until they accept it, you remain the owner and can cancel it. Once they accept, it becomes theirs and you cannot access it.

What if I need my money back before one year?

You cannot cash out a savings bond during its first year under any circumstance, even in an emergency. Plan accordingly and only buy bonds with money you will not need for at least 12 months. If you need emergency funds, a regular savings account is a better choice.

How do I know what interest rate I will get?

For Series EE bonds, the rate is shown on TreasuryDirect before you buy, and that rate is locked in for the life of the bond. For Series I bonds, the combined rate is posted on May 1 and November 1 each year. You can see the current rate on treasurydirect.gov before you purchase.

Can I sell my savings bond to someone else?

No. Savings bonds cannot be sold or transferred to another person. You can only cash them out to your own bank account, or gift them through the TreasuryDirect process, which requires the recipient to accept them. There is no secondary market for savings bonds.

What if I lose my TreasuryDirect password?

You can reset it through the login page at treasurydirect.gov. The Treasury will send a reset link to your registered email address. If you no longer have access to that email, contact TreasuryDirect customer service at 844-284-2676 (toll-free) to verify your identity and regain access to your account.