Savings accounts and savings bonds are built for the same purpose — and it’s right in their names. Both allow you to save money, albeit not at the strongest rates. But you’ll find distinct differences between these two financial tools.
Many banks offer accounts that can help you save money with few fees and easy access. But they don’t come with the nearly 80-year history of a US savings bond.
Still, their differences go beyond nostalgia to include how much you’re able to save, whether you’ll pay taxes on what you earn and more.
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| APY | 3.80% |
|---|---|
| Fee | $0 |
| Minimum deposit to open | $0 |
| New account fee | $0 |
| Minimum balance to earn interest | $0 |
| Interest compounding | Daily |
The Finder Score crunches over 250 savings accounts from hundreds of financial institutions. It takes into account the product's interest rate, fees, opening deposit and features - this gives you a simple score out of 10.
To provide a Score, Finder’s banking experts analyze hundreds of savings accounts against FDIC-reported national averages as a baseline. Accounts with rates well over the national average are scored the highest, while accounts with rates well below are scored low.
Savings accounts and savings bonds are similar when it comes to:
The two main types of savings bonds are EE Bonds and I Bonds. Both are solid ways to save money, but with important differences.
Savings bonds have been around for a long time. The first savings bonds were sold after President Franklin D. Roosevelt signed legislation creating them in 1935. Ever since, they’ve been a popular way to save money for the future.
Savings bonds have undergone many changes in that time. Even the modern EE bond, the type that most Americans are familiar with, has changed over the years.
Prior to 1995, EE bonds earned a fixed rate of interest with a guarantee to double in value after a specific period of time. For example, a bond purchased for $25 in April 1995 earned 4% per year with a guaranteed value of $50 in April 2013.
Even after the value of the bond doubled, it continued to earn interest 30 years after the bond was issued.
If you have old savings bonds, they could be worth more than you think. The Department of Treasury’s savings bond calculator can help you find out how much your old bonds are worth.
Everyday savings accounts offer an easy way to earn interest on your money with flexible deposits and withdrawals, while savings bonds lock up your money for a year before allowing you to withdraw your money.
You can make deposits to your savings account online through mobile check deposits or transfers. Withdraw your money at a branch, an ATM or by transferring it into another account electronically.
The easy way to buy a savings bond is online through the Department of Treasury’s site. With an electronic bond, you never have to handle physical bonds or worry about storing them. You can purchase either I bonds or EE bonds in any amount of at least $25.
To redeem an electronic bond, log in to the Department of Treasury’s site and select the bonds you want to redeem. You can then send the money to your bank electronically.
For paper bonds, you’re limited to I bonds only, and you can only purchase them using your tax refund. You can buy up to $5,000 in paper I bonds each year in increments of:
Redeeming a paper bond involves converting it to an electronic bond and redeeming it online. You can also redeem it by visiting a local bank or mailing it to the Treasury.
Savings accounts and savings bonds share features, but they’re designed for slightly different goals.
Your everyday savings account offers a place to keep money that you might need quickly for, say a financial emergency. While savings bonds are better suited for a long-term investment of money you won’t need until later.
APY stands for “annual percentage yield” and factors in compound interest. See why the difference between APY and interest matters so much.
CDs lock in your APY and funds for a set period, while HYSAs allow easier access to your savings with varying rates.
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