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How Do Savings Bonds Work Article
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Know All About US Savings Bond
from:Introduction
As an initiative to encourage, promote and develop a strong savings base, the US government introduces various attractive schemes for inviting investments from its citizens, which promote savings as well fund the government’s borrowing needs.
The US savings bond is one of such saving options offered by the government, having attractive interest rates, lucrative terms and easy application and payment options. In fact, the US savings bond is considered as one of the safest forms of investment in the US, as they have the full faith of and are supported completely by the US government.
The Concept
The US savings bond is basically a debt security, issued by the US department of the Treasury, also commonly referred to as the obligation of the government of the US. The main feature which attracts scores of investors is the fact the US savings bond is exempt from state as well as local taxes.
There are two main categories of a US savings bond that are currently being issued. Below, we’ve included a brief description of each one of these.
A) I Bonds – Issued either on paper or electronically, this type of a US savings bond is purchased at face value denomination, the minimum purchase amount being $50 for a bond issued on paper and $25 for a bond purchased electronically. Known as an accrual-type of security, the interest on this type of a US savings bond is added monthly.
B) Series EE Bonds – These bonds are also issued electronically as well as manually. While the paper bonds are purchased at half their face value, with limit of $25 for a $50 paper bond, the electronic bonds are purchased at face value of $25 from the Treasury Direct.
For both the Series I as well as the Series EE bonds, the interest can be deferred or declared on the taxes annually. In a situation where the US savings bond is stolen, destroyed or mutilated, the investor is required to intimate the Department of Treasury, furnishing all the possible details, so that the same can be replaced at the earliest.
To make this form of investment more investor-friendly, at the time of purchase the US savings bond can be registered to a single person, two people and alternatively, to a primary owner and a beneficiary. In addition, the interest accrued from the US savings bond can also be excluded if used to pay higher education expenses, such as college tuition.
In addition, the federal taxes on the interest amount can be deferred until the buyer cashes in the bond or stops paying the interest at maturity.
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How Do Savings Bonds Work News
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Premium bond winners fall as interest cut hits popular saving product - Telegraph.co.uk
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