U.S. savings bonds are designed and marketed as low cost savings vehicles for college and retirement accounts. Income earned from Series EE and Series HH bonds are exempt from local and state taxation. Series EE Bonds are sold at a 50% discount to their face value and are sold in denominations from $50 to $10,000. The maturity of the issue is 30 years. Series HH bonds are issued at par value in denominations of $500 to $10,000. Series HH bonds earn interest for 20 years and can only be issued and redeemed through Federal Reserve banks. Interest is paid semiannually. An investor can only purchase HH bonds by exchanging Series EE bonds that are at least six months old and that haven't passed final maturity by more than one year.
Represent loans to the federal government, to be repaid in full, with interest, at a specified future date known as the maturity date. Series EE and HH bonds issued today are sold at a 50% discount to face value (the amount paid at maturity).
Securities issued by the U.S. Treasury in relatively small denominations for individual investors. Investors who buy U.S. savings bonds in effect make a loan to the government, in return for the government's promise (represented by the bond, a nontransferable debt certificate) to repay the loan with interest. The interest is free from state and local taxation. U.S. savings bonds are considered to be risk-free investments, since they are backed by the U.S. government. (Also known as savings bonds)