Business and Personal Finance Dictionary

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• UNITED STATES SAVINGS BOND
  
  Series EE savings bonds are issued by the US government in face value denominations ranging from $50 to $10,000 and are sold directly to investors by banks, credit unions, and savings and loan associations at a discount. They are also available through payroll deduction plans offered by some employers. Series EE bonds pay interest for 30 years at a rate that's readjusted every six months. Series HH bonds, which you can buy at face value only through an exchange for Series EE bonds, pay a fixed rate of interest for up to 20 years. With both types of bonds you earn less if you keep the bonds for fewer than five years. In addition, Series I bonds, which are sold at face value, are indexed for inflation. The interest rate you earn varies, based on changes in the consumer price index (CPI). The interest on US savings bonds is exempt from state and local taxes and is federally tax-deferred until the bonds mature or are cashed in. At that point, the interest may be tax-exempt if you use the bonds to pay college expenses, provided that your adjusted gross income (AGI) falls in the range set by federal guidelines.
  
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