Savings bonds are a reliable, low risk government-backed savings product that earns interest and is issued in a variety of denominations.
You may redeem savings bonds at Miami Firefighters FCU.
Savings bonds are debt securities issued by the U.S. Department of the Treasury to help pay for the U.S. government’s borrowing needs. U.S. savings bonds are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government.
Starting Jan. 1, 2012, you can no longer buy paper savings bonds at financial institutions. But you can go online to purchase two types of electronic savings bonds. See below for details:
Series EE U.S. Savings Bonds are an appreciation-type (or accrual-type) savings security. They are sold at face value, so you’ll pay $50 for a $50 bond. The bond is worth its full value upon redemption. The interest is issued electronically to your designated account. You cannot buy more than $10,000 (face value) during any calendar year. If you redeem the bonds in the first five years of buying them, you’ll forfeit interest payments for the three most recent months. After five years, you won’t be penalized for redemptions.
Series I U.S. Savings Bonds are inflation-indexed. They are sold at face value and you can buy up to $10,000 (face value) in any calendar year. Series I Bonds offer a fixed rate of interest, adjusted for inflation. As with Series EE Bonds, if you redeem Series I Bonds in the first five years, you’ll forfeit the three most recent months’ interest. After five years, you won’t be penalized for redemptions.
Key advantages of savings bonds include:
Popularity as gifts. Savings bonds are a popular birthday and graduation gift and also can be used toward financing education, supplemental retirement income, and other special events. Unlike other securities, minors may hold U.S. savings bonds in their own name.
Tax advantages. You pay no state or local taxes on the interest on the bonds, and you can defer paying federal taxes on the interest until you cash in the bond or until it matures. In addition, tax benefits are available for eligible taxpayers when Series EE and Series I savings bonds are used for qualified education expenses. For details on the education tax exclusion and the requirements to qualify, click here.
You can buy these electronic savings bonds in penny increments, from $25 up to $10,000 each year. (In paper form, these bonds were only available in specific denominations.) For more on the switch to all-electronic savings bonds and on how to open a TreasuryDirect account, visit this page at TreasuryDirect.gov. You can use its Savings Bond Calculator and compare the different types of securities issued by the Treasury.