How Do I Buy A Savings Bond For A Baby

Buying a savings bond for a baby is one of the best gifts you can consider. This allows you to save for the child’s future without significantly impacting your finances since you can start at $25. Keep reading to learn more about savings bonds and how you can buy one for a baby. 

Can you buy a bond for a baby?

Yes, you can buy a bond for your baby. This could be a better alternative than giving material gifts like teddy bears, toys, or money. 

Although these things could provide temporary happiness, a savings bond as a gift for your little one may be better in the long run because it won’t perish. You can also use it to set a proper foundation for creating their financial path. 

What type of savings bond should I buy for a baby?

A savings bond for a baby has a par value of not more than $1,000. It’s considered fixed-income security since you can start for as low as $25, making these bonds popular among average retail investors. And you can choose from these types of savings bonds when buying for your child: 

Newborn Considerations

Even a newborn baby can now own a savings bond. You can buy paper bonds such as the Series I bonds and name such under their name. However, the newborn or baby must have a Social Security number and be a resident or citizen of the United States. 

Series I Bonds

You can buy the Series I bonds in a paper format, and this is the only type of savings bond in the US that allows such a format. However, you need to purchase the bonds with your federal income tax refund to avail of the paper. 

The interest rates of the Series I bonds have a two-component system. 

One is for all urban consumers, wherein the interest rates are adjusted every six months based on the consumer price index. This component is known as the inflation rate.

The other depends on the time of issuance, and this is known as the fixed rate. 

Series EE Bonds

This type of bond can at least double in value after 20 years, as guaranteed by the US Treasury. The Treasury will also ensure to make up for the difference if the stated interest rate is insufficient to double the value of the bond. 

As to its interest rate, the Series EE bonds earn the same interest rate during each period of the year. These periods are twice a year, in February and November, as a fixed rate of interest for the bond. 

How can I purchase savings bonds as a gift?

These days, buying a digital savings bond as a gift is now possible. It’s also easy to do this by following these steps: 

  1. Visit the site of the US Treasury –
  2. You can register for an account in the TreasuryDirect if you haven’t got one because you need it for login purposes. 
  3. Select the type of bond you want to give as a gift for the child ranging from $25-$10,000. 
  4. Next is to send your gift to the child’s TreasuryDirect account.
  5. Or you can also opt for a gift certificate that you can print. 
  6. You need to have the baby’s TreasuryDirect account number, Social Security Number, and legal name. The parents of guardians would need to set up a Minor Linked Account within their own TreasuryDirect account so their child can receive a savings bond as a gift. 
  7. You may also hold the bond in the “Gift Box” section of your account if the parents or guardian doesn’t have an account then give it at a later date.

Where can I buy savings bonds as gifts?

You can only buy savings bonds as gifts at the US Treasury since they already have a website for online purchases. 

Or you can also submit a filled out IRS Form 8888 with your tax return if you want a paper Series I bond. Here, you can use a part of your expected tax refund or all of it when purchasing the bond under the child’s name. If you don’t have a TreasuryDirect account, this is an option since you’ll be receiving it in paper form. The IRS will send the paper to your registered address. 

Popular Alternatives To Savings Bonds

Savings bonds are outstanding because anyone can afford them. But if you want other types of financial investment gifts for a child, then check out these alternatives: 

Certificate Of Deposit (CD)

The CD is similar to a savings bond wherein a period is required before the money can earn interest. But unlike the Series I and Series EE bonds, you can buy a CD in a bank.

Its maturity can also be as long as five years or as few as six months, unlike savings bonds that need decades. Moreover, the interest rates are higher in CDs than in savings bonds. 

Savings Account

Another popular alternative is regular savings account with a credit union or bank. Although the guardian or parent must act as a custodian for minors, the money only belongs to the child. 

However, the recipient of this account can only withdraw it when he reaches 18 or 21. The best thing about a savings account is that the Federal Deposit Insurance Corporation protects it from loss. This means the money in this account is guaranteed not to lose value. 

Takeaway FAQs for the article:

Are savings bonds a good baby gift?

If you want a long-lasting gift that a baby can use in the future, then savings bonds are better than material things. You can use it to start saving for the child’s future expenses such as college tuition, car, or other essential needs. 

How much is a $50 savings bond?

If you bought a $50 savings bond, you only get to pay $25. That’s because you only pay half the price of the bond’s face value. 

How much does a $100 bond cost?

As mentioned, you only pay half of the bond’s face value which means the cost of a $100 bond is only $50. After twenty years, you can redeem it in its face value which is at least $100, plus its interest. 

Can I buy a savings bond at a bank?

Before 2012, you could buy a savings bond at credit unions, banks, and other financial institutions. But when the US Treasury switched over to an online-only platform, buying savings bonds could only be through the US Treasury. 

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