U.S. savings bonds are investments in the U.S. Treasury. Your investment is savings bonds is backed by the full faith and credit of the United States. In other words, as investments go, savings bonds are as safe an investment as currently exists. This is important since savings bonds, which are often given as gifts to children, must be held for a certain number of years before reaching their full “face value”.
Most of us have received savings bonds as gifts when we were a child for our birthday, christening, graduation from elementary school and at other milestones in our lives. As children, receiving gifts of savings bonds was a bit of a mystery. They weren’t “real money” that we could spent (which is why they make great gifts). They weren’t as exciting as the latest toy on TV. However, many of us who later in life redeemed savings bonds eventually had our moment of excitement. ;)
Savings bonds can usually be purchased at your local bank or credit union. Typically you or a bank clerk will fill out an application naming the beneficiary and providing other necessary personal information. The bank then submits the application to a Federal Reserve Bank which will issue and mail the savings bond to the beneficiary or to whomever you designate.
In addition to buying savings bonds at your local financial institution you can now also buy savings bonds online, directly from the U.S. Treasury, at the Tresury Direct website.
Savings bonds are purchased “at a discount” to their face value, meaning that a savings bond with a $50 “face value” (printed on the face) will typically cost much less and will only realize its full face value if held for a sufficient number of years to reach that value by accumulating interest.
Many banks and the “Treasury Direct” website offer event customized gift certificates (baby, birthday, graduation, wedding, etc.) that you can present to the person who will eventually receive the savings bond gift in the mail. This way they can be pleasantly surprised twice. ;)