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Finance Dictionary and Glossary of Investment Terms
Savings bond
Definition 1.
A government bond issued in face value denominations from $50 to $10,000, with local and state tax-free interest and semiannually adjusted interest rates.
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Definition 2.
A registered, non-callable, non-transferable bond issued by the U.S. Government, and backed by its full faith and credit. Savings bonds differ from other Treasury securities in several ways. Savings bonds are non-marketable, meaning that they cannot be bought and sold after they are purchased from the government; therefore, there is no secondary market for savings bonds. The tax benefits associated with savings bonds are significant. Like all treasury securities, they are exempt from state and local taxes, but in the specific case of savings bonds, all federal taxes may be deferred until the bond is redeemed. Therefore, even though interest will accrue, no taxes will be due until that money can be accessed. Additionally, if the money received at redemption is used to pay tuition expenses for the holder, a spouse or a dependent in the same year, the interest earned may be exempt from federal taxes as well. Face values range from $50 to $10,000. also called U.S. Savings bond.
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