# U.S.

Savings Bond FAQ
Q1: What are US Savings Bonds?

Supplemental training material: savings bonds at tax time

US Savings Bonds are savings instruments for individual savers issued by the U.S. government’s Department of Treasury. The most common types of savings bonds are Series EE and Series I savings bonds. The new savings bonds at tax time policy offers only paper Series I savings bonds on the tax form. Series I bonds are sold at face value (a \$50 bond costs \$50), and grow in value for up to 30 years. Both types of bonds stop accruing interest after 30 years. Q2: What is the current interest rate of the Series I Savings Bond? The current interest rate of the Series I Savings Bond is .74%. It will change again on May 1st, 2011. Q3: How is this interest rate calculated? This interest rate is known as a composite interest rate, and has two components: a guaranteed fixed rate, which does not change over the 30 year period of the bond; and a semiannual inflation rate, which is adjusted twice a year, in May and November. See below for how the current interest rate is calculated, and the formula used to compute the composite rate. Current fixed rate: 0.0% Semiannual inflation rate = .37% Composite rate = [Fixed rate + (2 x Semiannual inflation rate) + (Fixed rate x Semiannual inflation rate)] Composite rate = [0 + (2 x 0.0037) + (0.000 x 0.0037)] Composite rate = [0.0 + 0.0074 + 0] Composite rate = [0.0074] Composite rate = .74% Q4: Will I be charged a fee to buy a Savings Bond? No. There is no fee to buy a Savings Bond. Further, you will not be charged any fees after you buy the bond, even when you cash it in (“redeem” it). Q5: Will I get interest every month on a Savings Bond that I buy at the VITA site?