U.S. Savings Bonds have helped fund a wide range of projects throughout the U.S. and worldwide. The U.S. government issues a savings bond like this (federal bonds exist as well as others). The bonds are designed to allow citizens of the country to help fund the specific needs of that organization. Today, savings bonds are often considered a reliable way to earn money because they carry minimal risk. And, if held for the desired length of time, they reach their total value no matter what happens with interest.

If you are considering investing in U.S. savings bonds, there are a few things you should know about them before you invest.

What Is a U.S. Savings Bond?

A U.S. savings bond is a government bond issued by the federal government. It is designed to help raise funds for the government body, often to pay for things like capital projects or operational costs. The government will sell bonds as a way to obtain the funds it needs from consumers. This is like the government borrowing money from you. You give the government funds now, and they pay back the amount promised in 20 years or another pre-determined date.

Bonds are beneficial for many reasons, but precisely because they guarantee payment when they are due. In addition, earnings from bonds are not subjected to state or local income tax, creating a way to grow your savings without having to pay taxes on those funds.

Bonds are non-negotiable, and you cannot transfer them to others in most cases. Yet, they can be a worthy investment for many people.

When Should You Use a U.S. Savings Bond?

There are many benefits to using a savings bond. The key here is that they will grow in value over time without the risk of not being paid back. However, the money you invest in them is tied up for an extended period, sometimes as long as 20 years.

There are limits to them, though.

• If you redeem the savings bond early, you will not receive the full value but the face value and interest for the time it was kept in place.
• Bonds will mature at various timeframes, so you need to consider which timeframe is best for you, with longer periods allowing for a higher value. This can range from 15 years up to 30 years.
• You can only purchase these bonds from the government. More so, you cannot transfer them easily because they are a type of contract you have with the government.

Types of Savings Bonds

There are several types of U.S. savings bonds. This includes:

• Series EE Savings Bonds: These are some of the most commonly available. They were first released in 1980 after the Series E bond was retired. These bonds are sold at their face value. That means that if you want to buy a $50 bond, you will pay $50. The bond is then worth its full value at redemption. You can purchase as much s $10,000 worth of these bonds each year.
• Series I U.S. Savings Bond: This type of bond was first released in 1998. It is sold at face value and has an interest rate that adjusts based on inflation, so your money remains protected.

Key U.S. Savings Bond Account Terms

If you are considering the use of savings bonds, there are a few terms you should know before you make the decision to use them:

• Series EE bonds: These are the most commonly used and have a fixed interest rate. They are sold at face value.
• Early redemption: It is possible to cash in your bond before they mature, but doing so will mean you do not earn the bond's full value.
• Term: This is the length of time that you will be able to hold the bond to collect the full value of the bond.

Keep in mind that savings bonds can be available through state and some local governments, as well as federal governments in the U.S., Consider all options before choosing which one is best suited for your needs. Most have virtually no risk to them.