Savings bonds are debt securities issued by the U.S. Department of the Treasury to pay for the U.S. government’s borrowing needs. Saving bonds are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government.
There are several types of U.S. savings bonds:
U.S. savings bonds have tax advantages. The holder of the bonds can defer federal taxes on the interest until he cashes in the bond or stops paying interest at maturity. Savings bonds are also exempt from state and local taxes. Because savings bonds are registered with the U.S. Treasury’s Bureau of the Public Debt, one can get bonds replaced if they bond is lost, stolen, or destroyed.