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Savings bonds often pay more, with less tax, than savings accounts
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Savings bonds aren't just for kids; they can provide anyone with a low risk investment alternative to savings accounts, CDs or high-yield checking accounts, and are less restrictive than you might think. Plus, they often pay higher interest rates than savings accounts and offer tax breaks.
Saving bonds accrue interest for up to 30 years, but you can actually sell them at any time (the only "catch" is that you forfeit 3 months of interest if you sell within the first 5 years). Savings bonds are also state tax free and federal tax deferred on interest gained, adding to their payout benefit.
Visit TreasuryDirect.gov to check out the latest interest rates on EE and I bonds. In addition, here's some quick info on how these two types of bonds differ:
The benefit of deferring taxes paid on savings bonds interest allows you to be strategic about when you sell. This can be particularly beneficial to people who have income that fluctuates from year to year (and thus a fluctuating tax bracket). Wait for a year when you are in a lower tax bracket (for example, while you are in school, or have other tax credits to offset income) and cash out your savings bonds then to minimize your tax hit.
Consult a financial advisor to see if savings bonds are right for you. Read more at TreasuryDirect.gov.