How do savings bonds work?

Answer by  chemistyisfuuun (32)

A savings bond collects interest. They are generally bought for a five-year period. If you cash them in before the five-year period, you will be penalized by forfeiting some of the interest collected. However, if you cash them in after the fixed period, you will receive the full amount.

Answer by  mspattar4 (12)

Bonds are issued by banks and government organisations, and have fixed period, rate of returns too.The collected funds will be invested in national projects, returns earned are shared with investors.

Answer by  Att4372 (1704)

You buy at face value - $25 and up. Bonds earn interest, which is added to the face value. When you redeem the bond, you get face plus accumulated interest. You pay taxes when you redeem. The rate in effect when you buy cannot go down.

Answer by  Jennk (388)

You purchase a savings bond for a set price (50% of the mature price) then you hold it for a specified length of time and it matures to double its value. Ex: purchase a $200.00 bond for $100.00. You hold the bond for 10 years and it's value is $200.00.