What are savings bonds?

Savings bonds are bonds sold by the U.S. Treasury. They are used to raise money from the public to fund its operations and administer the economy. When the government sells bonds, it is essentially taking a loan from the public, which it guarantees to repay at some point in the future.

What is the difference between savings bonds and savings accounts?

Both savings bonds and many savings accounts are backed by the U.S. government, although there are some differences between the two when it comes to rate of return and accessibility of your funds. Many high-yield savings accounts currently earn higher interest than savings bonds.

How do savings bonds work?

Bonds are sold at face value, for example, a $50 bond costs $50. Bonds accrue interest, and your gains are compounded, meaning that interest is earned on interest. Savings bonds differ from traditional bonds in several key ways: