Why Would a Person Purchase a United States Savings Bond?


Quick Answer

Reasons for purchasing U.S. savings bonds include competitive interest rates, tax-exempt income and a variety of available denominations. U.S. savings bonds offer a safe investment option, with a non-decreasing principal and an easy redemption process.

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Full Answer

Interest rates for U.S. savings bonds are in line with the rates in the market at any given time. This ensures that the money invested in savings bonds earns interest at rates similar to those of other investment options. A person may choose to buy U.S. savings bonds due to the monthly calculation of interest as compared to the semi-annual calculations conducted on corporate bonds.

U.S. savings bonds offer investors a chance for reinvestment of the interest earned, increasing the amount of money earned each year. A person may also buy U.S. savings bonds to enjoy the state income tax exemptions associated with this investment option.

The bonds come in eight denominations, which is an added advantage for investors who want a flexible investment option. The denominations range from $50 to $10,000, attracting investors from various income brackets.

U.S. savings bonds are easy to redeem after the initial 12 months have elapsed. They can be purchased at various banks or online by following a simple process. U.S. savings bonds are one of the safest investment options in the market and are fronted by the government.

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