Where to buy savings bonds

You can buy U.S. savings bonds in two places: through TreasuryDirect, the official government website, or through a bank or broker. TreasuryDirect is the most common route and the one most people use. You create an account at treasurydirect.gov, link a bank account, and buy bonds electronically. The bonds are held in your TreasuryDirect account — you do not receive a physical certificate in the mail.

If you prefer to work with a bank or broker, you can buy bonds through them instead. They charge a fee for this service, which TreasuryDirect does not. Banks and brokers typically deliver bonds as physical certificates or hold them in a brokerage account. For most people, TreasuryDirect is simpler and cheaper.

Key Takeaways

  • TreasuryDirect is the official U.S. government website where you can buy savings bonds directly without paying a fee.
  • You need a Social Security number or Individual Taxpayer Identification Number, a valid email address, and a U.S. bank account to open a TreasuryDirect account.
  • Series EE bonds and Series I bonds are the two types of savings bonds you can buy; Series I bonds adjust for inflation while Series EE bonds earn a fixed rate.
  • You can buy as little as $25 in bonds, and the purchase happens electronically through your TreasuryDirect account within minutes.
  • Savings bonds cannot be cashed in for one year after purchase, and you lose the last three months of interest if you cash them in before five years.

Setting up a TreasuryDirect account

Go to treasurydirect.gov and click "Open an Account." You will need your Social Security number or Individual Taxpayer Identification Number, a valid email address, and a U.S. bank account. The site will ask you to create a username and password, verify your email, and answer security questions. This takes about 10 to 15 minutes.

After you create your account, you must link a bank account for purchases and redemptions. You provide your bank's routing number and your account number. TreasuryDirect will make two small test deposits to your account — usually within one to two business days — and you will need to confirm the amounts to verify ownership. Only after this verification is complete can you buy bonds.

If you are buying bonds for a minor, you will need to set up a separate account as the custodian. The minor's Social Security number and your own are both required. The account is held in your name as custodian, and the minor cannot access or transfer the bonds until they reach the age of majority in your state.

Choosing between Series EE and Series I bonds

The two types of savings bonds available to individual buyers are Series EE and Series I. Series EE bonds earn a fixed interest rate set by the Treasury Department and announced every six months. The rate does not change for the life of the bond. Series I bonds earn a combined rate: a fixed portion plus an inflation adjustment that changes every six months based on the Consumer Price Index.

Series I bonds are often the better choice when inflation is high, because the inflation portion of your earnings rises with prices. Series EE bonds are simpler if you want to know exactly what your bond will be worth at maturity. Both types earn interest for 30 years, but you can cash them in after one year (with a penalty if you cash before five years).

The interest rate environment and your own timeline matter here. If you plan to hold the bond for decades and want predictability, Series EE may suit you. If you are concerned about inflation eating into your returns, Series I protects against that. You can own both types in the same TreasuryDirect account.

Buying your first bond

Once your bank account is verified, log into TreasuryDirect and select "BuyDirect." Choose the bond type (Series EE or Series I), then enter the amount you want to buy. The minimum purchase is $25, and you can buy in any amount above that. You do not have to buy in round numbers — you could buy $47.50 if you wanted to.

Select the issue date (usually the current month) and confirm the purchase. The money is withdrawn from your linked bank account, typically within one to three business days. The bond appears in your TreasuryDirect account when ready, and you can view its current value, interest earned, and maturity date anytime you log in.

You can buy as many bonds as you want, but there are annual purchase limits set by the Treasury. For Series EE and Series I combined, you can buy up to $10,000 per calendar year through TreasuryDirect. If you want to buy more than that, you can purchase additional Series I bonds with your federal tax refund (up to $5,000 per year).

Understanding the holding period and penalties

Savings bonds cannot be cashed in during the first year you own them. This is a hard rule — there are no exceptions. If you need the money within 12 months, do not buy a savings bond.

After one year, you can cash in your bond anytime. However, if you cash it in before five years have passed, you lose the last three months of interest. For example, if you cash in a bond after two years, you receive the interest earned through month 21, not month 24. After five years, you can cash in the bond without this penalty and receive all interest earned.

The penalty is built into the redemption value — TreasuryDirect calculates it automatically when you request a redemption. You do not have to do anything. The money from the redemption is deposited into your linked bank account within one to three business days.

Redeeming your bonds

To cash in a bond, log into TreasuryDirect, find the bond in your account, and select "Redeem." Confirm the redemption, and the money is sent to your bank account. The process is straightforward and takes a few minutes. You can redeem part of a bond or the entire amount.

Bonds continue to earn interest for 30 years. If you do not redeem them by year 30, they stop earning interest and the account is closed. The Treasury will contact you before this happens, but it is worth noting if you plan to hold bonds for a very long time.

When you redeem a bond, you will receive a 1099-INT form from the Treasury at the end of the tax year showing the interest you earned. You must report this interest as income on your federal tax return. The interest is subject to federal income tax but not state or local income tax.

Buying bonds as gifts

You can buy savings bonds as gifts through TreasuryDirect. The bond is issued in the recipient's name, and you must have their Social Security number or Individual Taxpayer Identification Number. You pay for the bond from your own account, and it is transferred to the recipient's TreasuryDirect account (or a new account is created for them if they do not have one).

The recipient can then manage the bond themselves once they have access to the account. If the recipient is a minor, you will set up a custodial account as described earlier, and the bond is held in your name as custodian until they reach the age of majority.

Frequently Asked Questions

Can I buy savings bonds if I do not have a bank account?

No. TreasuryDirect requires a U.S. bank account to link to your account for purchases and redemptions. If you do not have a bank account, you can buy bonds through a bank or broker instead, though they will charge a fee.

What happens if I need to cash in my bond before one year?

You cannot. Savings bonds have a one-year holding period, and there are no exceptions. If you think you might need the money within 12 months, a savings bond is not the right choice for you.

Do I have to pay taxes on the interest from my savings bonds?

Yes. The interest is subject to federal income tax. You can choose to report the interest each year or wait until you cash in the bond to report all the interest at once. The interest is not subject to state or local income tax. You will receive a 1099-INT form from the Treasury showing the interest earned.

Can I change my mind after I buy a bond?

No. Once you buy a bond through TreasuryDirect, the purchase is final. You cannot cancel it or get your money back. You must wait at least one year before you can redeem it.

What is the difference between a savings bond and a Treasury bond?

Savings bonds (Series EE and Series I) are designed for individual savers and cannot be sold or transferred. Treasury bonds are longer-term securities that can be bought and sold on the secondary market. Treasury bonds are typically purchased by investors and institutions, while savings bonds are meant for personal savings.