Savings bond is a considerable gift for many people to give their family members especially children and grandchildren in the hope that they get good returns whenever in need of some cash. Earlier, these savings/ paper bonds were available with most credit unions and banks but after 1 January 2012, they are no longer available for buyers at these financial institutions. For those who are looking to purchase savings bonds, herein are some essential information to know about savings bond purchases and redemption.
What is a Savings Bond?
Let’s check how do savings bonds work; it is a kind of securities issued by the US Department of Treasury for the individual and business investments. The government utilizes the money collected from buyers to fund various financial requirements and clear off the federal debts. The buyers in return earn interest on the face value of the purchased savings bonds.
Different Types of Savings Bonds
The Treasury Department issues savings bonds in Series EE and I for individuals and businesses online at the TreasuryDirect.gov website.
Electronic Savings/Gift Bonds
You can purchase electronic savings or gift bonds (available in series EE and I) at the treasurydirect.gov website and even with your tax returns for yourself or someone else as a gift.
The paper bonds are available only in series I with your IRS tax refund only for yourself or anyone else.
Learn how buying Series I paper savings bonds are good investment options utilizing your tax refunds at here.
How to Buy Savings Bonds Online
All interested buyers can buy the electronic bonds at the treasurydirect.gov website using their account in less than 10 minutes. Buying savings bond online is a convenient, safe and easy for individuals and institutions to accomplish in a few steps as stated below:
Step 1: Create Your Account
- Create your TreasuryDirect account
- Enter your account number (you will receive a pass code for single time access)
- Enter your passcode to access your account
Step 2: Customize Account and Security Settings
- Register the names of people who will own the bond (you and other co-owners)
- Choose the option “sole owner” in the registration if you are purchasing the bond for yourself or any single owner
- If you are co-owner with another person, add yourself as the “primary owner”
- Register the name of the beneficiary of the bond (if any) who will be able to redeem the bond after the death of the bondholder(s)
- If the bond recipient does not have a TreasuryDirect account, choose “This is a gift” from the options
- If the recipient is minor, the parents must create “Minor linked account” in their own account
Step 3: Link Your Bank Account
When creating your TreasuryDirect account, you must link your bank account for purchasing the bonds online.
Once your account is setup, you will receive an email confirmation from TreasuryDirect.gov along with your account information. Login to your account, to purchase the securities from the available options.
If you intend to purchase more savings bonds for the same person in future, you may access the Purchase Express feature on the account dashboard to avoid entering the same details every time.
Note: To purchase electronic bonds online, you must create your www.TreasuryDirect.gov account.
At the time of buying bonds online, keep the social security number (of the person for whom you want to purchase a bond), taxpayer identification number and bank account details handy.
Buying savings bonds is an interesting risk-free investment option for your loved ones allowing them to earn around 4-6 percent on the face value. These bonds are popular gifts for weddings, anniversaries, birthday, baby shower and lots more. They are redeemable at most local financial institutions allowing the owners to get instant cash at hand when in need.