Bonds» Current Rates, News & Information

The US Treasury offers two categories of government securities available for investment options for US citizens. The government offers marketable treasury securities that are available to be traded on the secondary market. Additionally there are non-marketable Treasury products, such as I Savings bonds, that are issued to individuals and are not a traded.

The history of all bonds, including the I Savings bonds can be trace back to the first bond called Liberty bonds. Liberty bonds were developed as a way for our government to fund the expenses of fighting World War I. Previously the government was able to finance wars by borrowing from other countries, but at that time there was no one to borrow from. The solution was borrowing directly from the country's citizens and offering them a financial incentive to provide the loan. The initial bonds caused some more crises for the government when they all matured.

Over time, bonds were redesigned to avoid any additional financial crunch on the US Treasury system. Since the mid 1930's, the government has sold savings bonds to generate low cost loans to help build their reserves. For the privilege of borrowing taxpayer's money, the government will pay interest and even offer tax incentives for those who are cashing in their matured bonds. At that time bonds were issued in an alphabetical order and today individuals can purchase I Savings bonds.

For series I Savings bonds purchased from November 2008 - April 2009 the Treasury announce interest rates to be 5.64%. The I Savings bonds are issued at face value and have a changeable yield based on inflation. The current interest rate (and all interest rate for this type of bond) is determined on two factors. First, there is a constant fixed rate for the life of the bond, and second, there is a variable rate that changes every six months. The adjustable rate is based on inflation and goes into effect May 1, 2009 and November 1, 2009 annually.

To understand what a HH Savings bond is, you must understand the whole network of government securities issued as a whole. Like all US savings bonds, HH Savings bonds are considered a non-marketable Treasury security. In general, they are government bonds issued by the US Department of the Treasury through the Bureau of Public Debt and they help finance the US debt - while providing investors a rate of return.

There are two categories of government securities:

1. Marketable treasury securities which are very liquid and heavily traded on the secondary market - including:

• Treasury bills (T-bills)
• Treasury notes
• Treasury bonds
• Treasury Inflation Protected Securities (TIPS)

2. Non-marketable treasury securities - this category includes:

• State and Local Government Series (SLGS)
• Government Account Series debt issued to government-managed trust funds
• Savings bonds which also includes HH Savings bonds are issued directly to subscribers and cannot be traded or transferred through market sales.

As of September 1, 2004 the U.S. Treasury was no longer issuing HH Savings bonds. Originally the HH Savings Bond series were sold at a discount and matured at face value or could have been redeemed in exchange for EE/E bonds. Although the HH Savings bonds are no longer being issued, there are still many in existence that have yet to mature.

If you are interested in redeeming your HH Savings bonds, the first step is going to your local bank. Your local bank cannot cash out your bonds, however, they can certify the bond or guarantee your signature. They can also help get the payment of the bonds forwarded by direct deposit into your account. Additionally, the bank can help with holding instructions and verify any supporting evidence of entitlement (if applicable) to the Treasury Retail Securities site that services your area.

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