How to Purchase U.S. Savings Bonds as Gifts

Quick answer

• You can buy U.S. Savings Bonds digitally or as paper bonds to give as gifts.
• Gift bonds must be purchased with your own funds and registered in the recipient’s name.
• There are annual purchase limits for savings bonds per Social Security Number.
• Consider the bond’s series (e.g., Series I or Series EE) based on the recipient’s financial goals.
• Paper savings bonds are no longer issued for new purchases but can still be redeemed.
• Digital savings bonds are managed through TreasuryDirect.gov.

Who this is for

• Individuals looking for a thoughtful and financially sound gift for birthdays, holidays, graduations, or other special occasions.
• Parents or grandparents wanting to start a savings habit for children or grandchildren.
• Anyone seeking an alternative to traditional gifts that can grow in value over time.

What to check first (before you act)

Goal and timeline

What is the purpose of this gift? Is it for long-term savings, a down payment on a future purchase, or simply to teach financial responsibility? The intended use will help determine which series of savings bond might be most appropriate and when the recipient might need access to the funds. Savings bonds have specific holding periods and redemption rules that affect their value and accessibility.

Current cash flow

Before purchasing any gift, ensure it fits comfortably within your budget. Review your current income and expenses to determine how much you can allocate without impacting your own financial stability. Savings bonds are a purchase, not an expense, so you’ll need the funds available upfront.

Emergency fund or safety buffer

If you are considering purchasing savings bonds, it’s crucial to have a solid emergency fund in place. This fund should cover 3-6 months of essential living expenses. Gifting should not come at the expense of your own financial security.

Debt and interest rates

Evaluate your current debt situation. If you have high-interest debt, such as credit card balances, it may be more financially prudent to pay down that debt before purchasing savings bonds. The interest earned on savings bonds is generally modest, and it’s difficult to outpace the high interest you’re likely paying on credit card debt. Check the current interest rates on your debts and compare them to the potential earnings of savings bonds.

Credit impact

Purchasing U.S. Savings Bonds does not directly impact your credit score, as it is not a form of credit. However, ensuring your finances are in order to afford such a gift, without taking on debt or neglecting other financial obligations, indirectly supports your overall financial health, which is a component of good credit.

Step-by-step (simple workflow)

1. Determine the recipient and gift amount

What to do: Decide who you want to give the savings bond to and how much you intend to gift.
What “good” looks like: You have a clear recipient and a specific dollar amount in mind for the gift.
A common mistake and how to avoid it: Overspending. Avoid this by setting a budget beforehand based on your current financial situation.

2. Choose the savings bond series

What to do: Decide between Series I bonds (inflation-protected) or Series EE bonds (fixed rate).
What “good” looks like: You understand the basic differences between Series I and Series EE bonds and how they might benefit the recipient. Series I bonds adjust with inflation, while Series EE bonds offer a guaranteed minimum rate.
A common mistake and how to avoid it: Not understanding the difference. Avoid this by visiting the official TreasuryDirect.gov website to read about each series’ features.

3. Check annual purchase limits

What to do: Be aware of the maximum amount of savings bonds an individual can purchase in a calendar year.
What “good” looks like: You know the current annual limit per Social Security Number (SSN) and can plan your gifting accordingly. Limits can change, so check the official TreasuryDirect.gov site for the most up-to-date information.
A common mistake and how to avoid it: Exceeding the limit. Avoid this by confirming the current year’s limit before making a purchase.

4. Open a TreasuryDirect account (for digital bonds)

What to do: If you plan to purchase digital savings bonds, you’ll need to create an account on TreasuryDirect.gov.
What “good” looks like: You have successfully registered for and verified your TreasuryDirect account. This process involves providing personal information and bank details.
A common mistake and how to avoid it: Delaying account setup. Start this process early, as verification can sometimes take a few days.

5. Purchase the savings bond

What to do: Log in to TreasuryDirect.gov and follow the prompts to buy savings bonds. You will need your bank account information to fund the purchase.
What “good” looks like: The purchase is completed successfully, and you receive a confirmation.
A common mistake and how to avoid it: Incorrect registration information. Double-check that the bond is registered in the recipient’s name and SSN.

6. Register the bond correctly

What to do: When purchasing, you will enter the recipient’s full name and Social Security Number (SSN). For paper bonds, you’ll fill out the registration on the bond itself.
What “good” looks like: The bond is registered to the intended recipient, including their correct name and SSN. This is crucial for ownership and redemption.
A common mistake and how to avoid it: Registering the bond to yourself. The bond must be registered in the recipient’s name from the start. You cannot transfer ownership of a savings bond purchased in your name to someone else.

7. Provide gifting information

What to do: For digital bonds, you can often designate a gift recipient during the purchase process. For paper bonds, you’ll present the bond to the recipient.
What “good” looks like: The recipient is aware they have received a savings bond as a gift. For digital bonds, they may receive an email notification or you can inform them.
A common mistake and how to avoid it: Not informing the recipient. They might not know they have a bond, or how to access or redeem it.

8. Inform the recipient about redemption rules

What to do: Explain to the recipient that savings bonds have minimum holding periods and may have penalties for early redemption.
What “good” looks like: The recipient understands when they can redeem the bond without penalty (typically after one year for Series I and EE, with a penalty if redeemed before five years).
A common mistake and how to avoid it: The recipient redeems the bond too early. This can result in losing some of the accrued interest.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Purchasing bonds in your own name when intending to gift	You own the bond, not the recipient. Transferring ownership is impossible.	Always register the bond directly in the recipient’s name and SSN from the start.
Exceeding annual purchase limits	The purchase will be rejected or may cause issues with TreasuryDirect.gov.	Check the current annual purchase limits for savings bonds per SSN on TreasuryDirect.gov before buying.
Not informing the recipient	The recipient may not know they have a bond, or how to access or redeem it, potentially leading to lost interest or forgotten assets.	Clearly communicate that you have purchased a savings bond as a gift and provide them with details or access information.
Incorrectly entering the recipient’s SSN	The bond may not be properly registered or may cause issues with tax reporting for the recipient.	Double-check and verify the recipient’s SSN before finalizing the purchase.
Redeeming a bond too early	For Series I and EE bonds, redeeming before five years incurs a penalty of the last three months’ interest.	Understand the minimum holding periods and redemption penalties for the specific bond series before advising or attempting redemption.
Forgetting about paper bonds	Lost paper bonds can be difficult to replace, and the gift may be forgotten or lost.	Store paper bonds securely and inform the recipient of their existence and location. For digital bonds, ensure the recipient knows how to access their TreasuryDirect account.
Gifting without considering the recipient’s age	Very young children cannot own savings bonds directly. They must be registered in the name of someone 18 or older, or a trust.	Ensure the recipient meets the age requirements for direct ownership, or consider using a custodian or trust arrangement.
Not considering tax implications for the recipient	While interest is tax-deferred, it is taxable when redeemed.	Advise the recipient that the interest earned is subject to federal income tax in the year of redemption. State and local income taxes do not apply.
Delaying TreasuryDirect account setup	This can postpone your ability to purchase digital bonds, especially if there are verification delays.	Set up your TreasuryDirect account well in advance of when you plan to make the purchase.

Decision rules (simple if/then)

• If the recipient is under 18, then consider using a custodian (like a parent) to hold the bond, because minors cannot directly own savings bonds.
• If you want to protect the gift’s value from inflation, then choose Series I bonds, because their interest rate adjusts with inflation.
• If you want a guaranteed minimum rate of return and simplicity, then choose Series EE bonds, because they offer a fixed rate that doubles in value over 20 years.
• If you are gifting to multiple people in the same year, then track each recipient’s SSN, because there are annual purchase limits per SSN.
• If you are gifting a significant amount, then be aware of the annual purchase limits, because exceeding them will prevent the purchase.
• If you want to avoid potential loss of interest, then ensure the recipient waits at least one year to redeem and ideally five years to avoid penalties for Series I and EE bonds.
• If you are purchasing digital bonds, then open a TreasuryDirect account, because this is the official platform for electronic savings bond purchases.
• If you are gifting a paper bond, then store it securely, because lost paper bonds can be difficult to replace.
• If the recipient is likely to need the money sooner rather than later, then consider a different gift, because savings bonds have minimum holding periods and redemption penalties.
• If you are gifting to a trust, then ensure the trust is properly established and that you have the trust’s EIN and registration details, because bonds must be registered to the trust’s name.
• If you are unsure about the current purchase limits or bond features, then visit TreasuryDirect.gov, because this is the definitive source of information.

FAQ

Can I buy a savings bond for my child?

Yes, you can purchase U.S. Savings Bonds as gifts for children. If the child is under 18, the bond must be registered in their name with a custodian (such as a parent or guardian) listed.

How do I give a paper savings bond as a gift?

Paper savings bonds are no longer issued for new purchases. However, if you possess older paper savings bonds, you can present them to the recipient. For new purchases, you must use TreasuryDirect.gov to buy digital savings bonds.

What happens if the recipient loses the savings bond?

If the savings bond is digital, it is securely stored in the recipient’s TreasuryDirect account. If it’s a paper bond and it’s lost, stolen, or destroyed, you can file a claim to have it replaced through TreasuryDirect.gov.

Are savings bonds taxable gifts?

The purchase of a savings bond is not considered a taxable gift by the IRS unless the value exceeds the annual gift tax exclusion. The interest earned on savings bonds is tax-deferred until redemption, and it is subject to federal income tax but exempt from state and local income taxes.

Can I redeem a savings bond I bought as a gift?

No, once a savings bond is registered in someone else’s name, you cannot redeem it. Only the registered owner(s) can redeem the bond.

What is the minimum amount I can gift in savings bonds?

You can purchase savings bonds in any denomination up to the annual limit. The minimum purchase amount for digital savings bonds is $25.

How long does the recipient have to wait to cash a savings bond?

Series I and Series EE savings bonds can be redeemed one year after the issue date. However, if redeemed before five years, you will forfeit the last three months of interest.

Can I buy savings bonds for someone without a Social Security Number?

No, all savings bonds must be registered with a Social Security Number (SSN) or a Taxpayer Identification Number (TIN).

What this page does NOT cover (and where to go next)

• Specific tax advice for your situation (consult a tax professional).
• Detailed investment strategies or portfolio allocation advice (consult a financial advisor).
• The process of setting up and managing trusts for gifting (consult an estate planning attorney).
• Redemption procedures for bonds purchased by businesses or entities.