US savings bonds are certificates that earn interest for up to 30 years. Bonds are extremely useful if you are looking for a way to diversify your savings. A bond can grow your money in conjunction with a standard savings account, a money market account, CDs and retirement accounts. As a safe investment tool, bonds are available in denominations of $25, making them an affordable savings vehicle.
In the past, you could walk into any bank, credit union or brokerage firm and purchase a government bond. The institution that sold the bond would issue a paper certificate, and this simple transaction made bonds easily accessible to the public. Today, US savings bonds are only available directly from the US government.
Buying directly from the government has always been an option. But with a local bank or credit union on every block, many found that it was more convenient to drive five minutes to a bank and make their purchase. This changed in January 2012 when paper bonds were discontinued, and electronic bonds became only available through the government.
Buying US Savings Bonds from the Government
There are certainly benefits to buying bonds directly from the government. Because newly purchased government bonds are available in electronic form, this lowers the risk of misplacement, theft or damage, which were common with paper certificate bonds. Plus, when you buy directly from the government, you don’t have to pay commission to a brokerage firm.
Despite the change, purchasing a bond is just as easy and quick. In fact, it may be easier than purchasing from a bank. Buying a bond from a local bank required getting in your car, driving to the bank and speaking with a banker. Now, simply visit the US Treasury website and complete your transaction.
Visit TreasuryDirect.gov and set up your account. An account is required to purchase bonds for yourself. Additionally, an account is required to receive a bond as a gift. If you plan on purchasing a bond for your child, grandchild or another person, this person must have a TreasuryDirect account in their name. There are no exceptions. Since minors cannot create their own accounts, parents can open a custodial account on their child’s behalf.
Who May Own a Bond?
There are conditions for buying and owning a US savings bond. Bonds are only available to people who have a Social Security number. Additionally, you must be either a US citizen, a US resident or a civilian employee of the US. There are also limits to the number of bonds you can purchase in a calendar year – up to $10,000 per bond type, per Social Security number. Bond purchases are not limited to individuals. Corporations, associations, partnerships, estates and certain entities may also purchase savings bonds from the government.
Unfortunately, bonds cannot be sold or transferred once purchased. As a matter of fact, only the person listed on the bond may redeem the bond. In the case of minor children, a parent or other legal guardian can cash bonds for their children.