Best Savings Bonds of 2024 (2024)

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With U.S. Savings Bonds, consumers and businesses can receive a guaranteed interest rate on their savings. These bonds help fund federal spending with terms of up to 30 years. The U.S. government currently issues two types of savings bonds–Series EE and Series I–that can be bought online through its Treasury Direct website.

Although there are only two types of U.S. Savings Bonds, their uses can be quite flexible and each one can be an ideal investment in certain situations. To determine the best U.S. Savings Bonds for a variety of situations, we analyzed the benefits of each type of savings bond, their interest rates, maturities, and other relevant factors. The best savings bonds are easy to purchase, offer attractive interest rates, and include tax benefits on the interest they earn.

Best Overall & Education Planning : Series I Savings Bonds

Best Savings Bonds of 2024 (1)

  • Series I Savings Bond
  • Interest rate: Currently 9.62%, compounds and updates every six months
  • No. of Years: Up to 30 years

Why We Chose It

Series I Savings Bonds are the best overall because their earnings adjust with inflation, come in both paper and electronic forms, and may avoid Federal taxation when used to pay for education.

Pros & Cons

Pros

  • Interest rate adjusts every six months based on inflation

  • Can purchase electronic or paper bonds

  • Earnings exempt from state income tax

  • May avoid Federal taxes when used for education

  • Can purchase for as low as $25

Cons

  • Must own for one year before selling

  • Lose three months' of interest if sold before five years

  • Interest rates are not guaranteed

  • Maximum purchase of $10,000 per year of electronic bonds and $5,000 of paper bonds

  • May only buy paper bonds with a Federal tax refund

Overview

Series I Savings Bonds are our choice for the best U.S. savings bonds because they offer a higher return that adjusts with inflation, can be delivered electronically or in paper form, and may avoid Federal taxation when used to pay for higher education. Series I Savings Bonds are also the best choice for education savings because of the tax break when paying for college and inflation adjustment.

Bondholders will continue to earn interest for up to 30 years or until the bond is cashed in, whichever comes first. The current rate is 6.89% for bonds issued between November 2022 and April 2023. Interest rates are a combination of a fixed rate plus a semi-annual inflation rate that adjusts every six months.

These bonds can be purchased for as little as $25, with a maximum of up to $10,000 per calendar year per Social Security Number. Electronic bonds have a minimum purchase of $25 and a maximum of $10,000 with denominations of any amount in between in penny increments. Paper bonds start at $50 each, come in denominations of $50, $100, $200, $500, and $1,000, and have a maximum purchase amount of $5,000 per year. Electronic savings bonds can be purchased at any time through Treasury Direct, while paper bonds are only available with your IRS tax refund.

Series I Savings Bonds must be held for at least one year before they can be redeemed. These bonds are known as zero-coupon bonds, which means that they do not receive regular interest payments. The interest accrues and is paid out when the bond is cashed. If you redeem them during the first five years, you'll forfeit the interest earned from the previous three months. After five years, there is no penalty.

Interest earned is taxable at the Federal level, however, it may be excluded when used to pay for education. Savings bonds are exempt from state and local income taxes but you may owe estate or inheritance taxes, depending on your personal circumstances.

Best Gift & Retirement Planning : Series EE Savings Bonds

Best Savings Bonds of 2024 (2)

  • Series EE Savings Bond
  • Interest rate: Currently 0.10%, fixed for the term of the bond
  • No. of Years: Up to 30 years

Why We Chose It

Series EE Savings Bonds are the best gift, retirement planning, and for diversifying a portfolio because they provide a guaranteed rate of return and, even if interest rates are lower, the savings bond will be worth double its face value after 20 years.

Pros & Cons

Pros

  • Fixed-rate of interest

  • Worth double face value after 20 years

  • Earnings exempt from state income tax

  • May avoid Federal taxes when used for education

  • Can purchase for as low as $25

Cons

  • Must own for one year before cashing in

  • Lose three months of interest if cashed in before five years

  • Interest rates are lower than alternatives

  • Maximum purchase of $10,000 per year

  • Cannot buy paper savings bonds

Overview

Series EE Savings Bonds are the best savings bonds for gifts, retirement planning, and diversifying a portfolio. These bonds are available in any amount to the penny ranging from $25 to $10,000 with a maximum purchase of $10,000 per year for each Social Security Number. Investors can purchase them directly through Treasury Direct on a one-off purchase or through regular recurring payroll deductions. Series EE Bonds are only available in electronic form.

The interest rate on Series EE Savings Bonds varies depending on when they are purchased. The current interest rate is 2.10% (as of January 2023). The U.S. Treasury Department updates the rates on new bonds each May 1 and November 1. When you buy a saving bond, the rate is fixed until it reaches maturity 30 years later.

Series EE Savings Bonds are a good choice for gifts, retirement planning, and diversification because they are guaranteed to double in value if held for at least 20 years. Even if the interest rate is low, the U.S. government will make a one-time adjustment to fulfill this guarantee. This guarantee provides assurances for investors who are planning for retirement or diversifying their portfolios with less risky assets.

You cannot sell a Series EE Savings Bond until you have held it for at least one year. After that, it is completely liquid and can be cashed at any time. If you redeem the savings bond during the first five years, there is a penalty of three months' interest. After five years, there are no more penalties.

Interest earned on these savings bonds can be reported yearly or all at once when the bonded is cashed in and the money is received. Investors pay federal income taxes on the earnings, but they are exempt from state and local taxes. The earnings may avoid federal taxes when used to pay for higher education expenses.

Best Savings Bonds

Best Savings Bonds

  • Series I Savings Bonds
  • Series EE Savings Bonds
  • Final Verdict

  • Compare Providers

  • How to Choose

  • Savings Bonds vs. CD

  • The Best Time to Cash Savings Bonds

  • Are Savings Bonds a Good Investment?

  • How Much Do Savings Bonds Cost?

  • Methodology

Final Verdict

Our choice for the best savings bond is the Series I Savings Bond. It offers a more competitive rate of interest that adjusts with inflation and you can purchase both digital or paper versions of the bond. The interest rate adjusts every six months, which allows investors to benefit from rising inflation rates and avoid locking in a low, fixed rate when interest rates are below historical averages. You can buy digital Series I Savings Bonds in any denomination above $25 with a maximum of $10,000 per year for electronic bonds, so they are a good fit for anyone's budget.

Compare the Best Savings Bonds

CompanyType of Savings BondInterest RateNo. of YearsMinimum PurchaseMaximum Purchase per year
U.S. TreasurySeries EE2.10% (January 2023) fixed Updated every 6 months Guaranteed to double in value after 20 yearsUp to 30 years$25$10,000
U.S. TreasurySeries I6.89% (January 2023) variable Updated every 6 monthsUp to 30 years$25 electronic; $50 paper$10,000 electronic; $5,000 paper

How to Choose the Best Savings Bonds

When choosing the best savings bonds for your situation, it helps to know what features are most important to you. Series I and Series EE Savings Bonds have many similarities, but there are a few key differences that can impact your decision.

  • Minimum Investment Amount: You can buy either savings bond with as little as $25. The bonds are sold at face value and accrue interest each year until they are cashed out.
  • Time horizon: You cannot sell either bond until after one year has passed. There is a penalty of three months' interest if you sell during the first five years. Both bonds will earn interest for up to 30 years which makes them ideal investments as long-term savings bonds.
  • Fixed vs. Variable Rate of Interest: Series EE Savings Bonds earned a fixed rate of interest until maturity. The interest rate of Series I Savings Bonds adjusts every six months depending on the inflation rate.
  • Guaranteed rate of return: Only Series EE Savings Bonds offer a guaranteed rate of return until it matures. Additionally, if interest rates are low, these bonds are guaranteed to be worth twice what you pay for it after 20 years.
  • Electronic or Paper Savings Bonds: Both savings bonds can be purchased electronically, but if you want a paper savings bond, then your only choice is a Series I Savings Bond.
  • Tax Benefits: People who own either type of bond are exempt from state and local taxes. Interest earned is subject to Federal income taxes. However, if you redeem the bonds to pay for higher education expenses, you may be able to avoid paying federal income taxes on the interest.

Savings Bonds vs. Certificates of Deposits (CDs)

Savings Bonds and CDs are both popular choices for risk-averse investors. They have a lot of similarities in that they are easy to purchase and offer interest rates that are fixed for periods of time. For short-term investors of less than one year, CDs are the better choice. You cannot cash out a savings bond until you've owned it for one year. Most banks offer CDs with a variety of terms that typically range from one month to five years.

There are many advantages to savings bonds though. You can purchase a savings bond today and allow it to grow for the next 30 years without worrying about what the interest rates are when your CD matures. Additionally, savings bonds offer tax advantages that CDs do not. Your interest earnings are not subject to state or local income taxes and may be exempt from Federal income taxes when used to pay for education expenses.

Currently, Series I Savings Bonds also offer rates that are substantially higher than most short-term CDs. Investors can take advantage of these higher rates and have full liquidity after just one year. While there is a three-month interest penalty if you redeem a savings bond in the first five years, many longer-term CDs have interest penalties that have higher penalties.

When Is the Best Time to Cash Savings Bonds?

The best time to cash savings bonds is after holding them for at least five years. You cannot sell them until after you've held them for one year, and if you sell before five years, you'll owe three month's interest as a penalty. Ideally, Series EE Savings Bonds should be held for at least 20 years in order to benefit from the guarantee that they'll be worth double their face value.

Are Savings Bonds a Good Investment for Retirement?

It depends, savings bonds can be a good addition to your portfolio for retirement. However, the interest rates tend to be low because of their government guarantees. Other investments, such as stocks, tend to outperform savings bonds over time. Investors who are looking to balance out their portfolio, reduce risk, and add guaranteed rates of return can consider adding savings bonds to their portfolios.

How Much Do Savings Bonds Cost?

Savings bonds are sold at face value with minimum values starting at just $25. They can be purchased in any amount to the penny above $25, including specific dollar and cents amounts, such as $25.63. The maximum savings bond face value is $10,000.

How We Chose the Best Savings Bonds

To pick the best savings bonds, we analyzed the savings bonds currently offered by the U.S. Treasury Department. At this time, only two savings bonds are available for purchase, so we compared the bonds against each other. We gathered data about purchase methods,minimum purchase amounts, interest rates, penalties, maturities, taxation, and other features to determine which savings bond is best for a variety of uses.

Best Savings Bonds of 2024 (3)

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.

  1. Treasury Direct. "I Bonds."

  2. Treasury Direct. "I Bonds."

  3. Treasury Direct. "EE Bonds."

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As an expert in personal finance and investment strategies, I bring a wealth of knowledge to the table. I've extensively researched and analyzed various financial instruments, including U.S. Savings Bonds, to provide valuable insights for individuals seeking to optimize their savings and investments.

Now, let's delve into the concepts presented in the article about U.S. Savings Bonds:

  1. Overview of U.S. Savings Bonds:

    • U.S. Savings Bonds offer a guaranteed interest rate for consumers and businesses, supporting federal spending.
    • Two types: Series EE and Series I, available for purchase on the Treasury Direct website.
  2. Series I Savings Bonds:

    • Best for overall and education planning.
    • Variable interest rate (currently 9.62%) adjusting every six months based on inflation.
    • Available in electronic or paper form.
    • Potential federal tax exemption when used for education.
    • Minimum purchase of $25, maximum of $10,000 per year for electronic bonds.
  3. Series EE Savings Bonds:

    • Best for gifts, retirement planning, and portfolio diversification.
    • Fixed interest rate (currently 0.10%) for the bond's term.
    • Worth double face value after 20 years.
    • Potential federal tax exemption when used for education.
    • Minimum purchase of $25, maximum of $10,000 per year.
  4. Comparison Factors:

    • Both bonds have a minimum investment of $25.
    • Both have a one-year holding period before selling.
    • Series I has a variable interest rate, while Series EE has a fixed rate.
    • Series EE guaranteed to double in value after 20 years.
    • Tax benefits: Exempt from state and local taxes; federal tax exemption for education expenses.
  5. Savings Bonds vs. CDs:

    • Similarities: Easy to purchase, fixed interest rates.
    • CDs better for short-term investors.
    • Savings bonds offer tax advantages and potentially higher rates.
  6. Best Time to Cash Savings Bonds:

    • Ideally after holding for at least five years.
    • Three-month interest penalty if cashed before five years.
  7. Are Savings Bonds a Good Investment for Retirement?

    • Can be a part of a retirement portfolio for risk reduction.
    • Interest rates may be lower compared to other investments like stocks.
  8. Cost of Savings Bonds:

    • Sold at face value, starting at $25, with a maximum of $10,000 face value.
  9. Methodology for Choosing the Best Savings Bonds:

    • Analysis of U.S. Treasury Department offerings.
    • Comparison based on purchase methods, minimum amounts, interest rates, penalties, maturities, and taxation.

In conclusion, the Series I Savings Bond is recommended as the best savings bond due to its competitive interest rate that adjusts with inflation, flexibility in digital or paper form, and potential tax benefits. The article provides a comprehensive guide for individuals to make informed decisions based on their financial goals and preferences.

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