Savings Bonds
Description
This article is from the Investing Articles: Bonds series.
Savings Bonds
Savings bonds are bearer bonds, which means that the person who has them can cash them. But they're also registered in the name of the person whose name appears on the front. Lost bonds often can be replaced by writing to The Bureau of Public Debt, Parkersburg, W.V., 26106-1328.
U.S. SAVINGS BONDS
To many people, bonds mean
U.S. Savings Bonds. But in fact they are unique among bonds, on
several counts.
Unlike other bonds discussed in this chapter, savings bonds aren't marketable -- that is, they can't be traded among investors. People buy them for themselves or as gifts, and usually hold them until maturity, or even longer. Savings bonds go on paying interest, sometimes as long as 40 years after the date of issue.
In one way, savings bonds are the original zero-coupon bonds: They're sold at a discount from par (or face) value and are worth the full amount at maturity. The cost and maturity periods vary, based on the series of the bond and the interest being paid. Since 1980, Series EE bonds have been sold in denominations of $50 to $10,000. They can be redeemed at maturity, or exchanged for Series HH.
Savings Bonds are sold directly by the U.S. Treasury and are tax-deferred from federal taxes until maturity. They're exempt from state and local taxes. When they mature, they can be redeemed at local banks.
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