What are U.S. Savings Bonds?
U.S. Savings Bonds are savings instruments for individual savers issued by the U.S. Department of the Treasury. For purposes of this program, only series I savings bonds will be offered.
Series I bonds are sold at face value (a $50 bond costs $50), and grow in value for up to 30 years. Each bond purchase must be a multiple of $50 and the total cannot be more than $5,000.
Series I bonds pay interest based on a combination of a fixed rate (which remains the same throughout the life of the savings bond) and a semiannual inflation rate that is updated each May and November. Savings bonds accrue interest until redeemed or until they reach their final maturity in 30 years.
Savings bonds can be redeemed for principal and accrued earnings anytime after the first 12 months after date of purchase (unless the taxpayer lives in an area affected by natural disaster.) Also, if a savings bond is redeemed within the first 5 years, the 3 most recent months' interest will be forfeited. After 5 years, no penalty will apply.