Savings bond

What It Means

A savings bond is a loan you make to the US government, which pays you interestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more in return. Today Treasury sells two kinds, Series EE and Series I, only in electronic form through a TreasuryDirect account. You can cash a bond after one year, you give up three months of interest if you cash it before five years, and it stops earning after 30 years. EE bonds bought since May 2005 earn a fixed rateFixed interest rateAn interest rate that's set when you borrow and stays the same for the life of the loan, so the monthly payment doesn't change. See more and are guaranteed to be worth at least double their purchase price after 20 years.

How People Say It

• "Grandpa gave us savings bonds when we were kids."
• "Is that an EE or an I bond?"
• "Don't cash it yet, it doubles at twenty years."

The Breakdown

An example. In June 2026, the Parks buy $1,000 of electronic EE bonds in their TreasuryDirect account. Bonds issued from May through October 2026 carry an EE rate of 2.40%, fixed for 20 years under the rules for EE bonds sold since May 2005.

Where it goes wrong. At 2.40%, the rate alone would take about 30 years to double the money, going by the rule of 72Rule of 72A shortcut for how many years money takes to double at a steady compound rate: divide 72 by the yearly rate, so 6% doubles in about 12 years. See more (72 ÷ 2.4 = 30). Treasury's guarantee closes that gap: at 20 years it adds whatever it takes to make the bond worth $2,000. The Parks need cash in year 15 and cash the bonds. With no penalty after five years, they keep what the 2.40% earned, but they give up the extra that the 20-year guarantee would have added.

What to watch for

• The 20-year date. It matters more for an EE bond than any other date.
• Old paper bonds. Treasury offers a way to convert paper bonds into your TreasuryDirect account.
• The yearly limit. $1010,000 stepsA popular daily step goal that began as the name of a 1960s Japanese pedometer; later studies find health benefits begin well below it. See more,000 of electronic bonds per series, per person, per calendar year.

Good to Know

TreasuryDirect sets new savings bond rates each May 1 and November 1; for bonds issued May 2026 through October 2026 it announced 2.40% for EE bonds and 4.26% for I bondsI bondA US Treasury savings bond whose rate combines a fixed rate with an inflation rate reset every six months; 4.26% for bonds issued May to October 2026. See more. Paper savings bonds stopped being sold at banks in 2012, and as of January 1, 2025, paper I bonds can no longer be bought, which ended the option to buy them with a federal tax refund. Ask a tax professional how the interest will be taxed in your situation.

Related Terms and Categories

• I bond

  A US Treasury savings bond whose rate combines a fixed rate with an inflation rate reset every six months; 4.26% for bonds issued May to October 2026.

• Certificate of deposit

  A deposit you agree to leave at a bank or credit union for a set term, until its maturity date, usually with a penalty for taking money out early.

• Inflation

  A general rise in the prices of goods and services over time, so the same amount of money buys less than it did before.

• Compound interest

  Interest paid on your original amount and on the interest it has already earned, so each year's interest is a little bigger than the last.

• Rule of 72

  A shortcut for how many years money takes to double at a steady compound rate: divide 72 by the yearly rate, so 6% doubles in about 12 years.

• CD ladder

  Splitting savings across several CDs with staggered maturity dates, so part of the money comes due at regular intervals instead of all at once.

Saving and investing basics