Treasury only allows U. Savings bonds are backed by the full faith and credit of the U. Most bonds purchased since May add interest on a monthly basis, while most bonds purchased before May add interest every six months.
If applicable to your own situation, it's also helpful to redeem the bonds when you are paying for qualified education expenses because the Education Tax Exclusion program allows you to deduct those expenses from your income, effectively rendering the income from the bonds tax-free.
Rates on savings bonds are roughly in line with interest rates on other safe savings vehicles, such as FDIC-insured bank accounts. Because of these limitations, buying bonds with a tax refund might be a better option if the intent is to give the bonds as a gift.
In buying a savings bond for her young nephew, our reporter learned that the process can be clunky.
When you use your tax refund, you can buy Series I savings bonds in paper form. Interest begins to accrue at the point of purchase. Purchasing Savings Bonds Traditionally, you could buy U.
Savings bonds definitely have a place within this philosophy, but they are far from the options with the highest return potential. Paper bonds that have yet to reach their maturity date and have been lost, stolen or destroyed, may also be converted to electronic form.