Question about savings bonds.

Question

Your payroll department forwards your bond deductions to NBT. Once a month, we will run bonds for your company and, depending on how much you have in your account, you are issued the bonds you’ve requested at sign-up. Your bonds start to accrue interest from the first day of the month they are issued, and will continue to earn interest up until the point they are cashed, a maximum of 30 years.

This is an explanation of bonds that my company offers. do the bonds get mailed to you every month? For instance, if I have a $100 bond deduction, does that mean i will get a bond of $100 mailed to my house and then it will accrue interest?

Answer 1

They won't necessarily issue you paper bonds.  Depending on the arrangements you or your company makes, you will either receive paper bonds or hold ownership to them via an electronic securities account with the federal government.

Either way, the bonds will accrue interest from the day they are issued in your name.  Electronic bonds are issued at face value.  That means if you purchase the bond for $25, its face value is $25.  Paper bonds are issued for half their face value.  That means you purchase a $50 bond for $25.  A bond is said to "reach maturity" when it reaches its face value.  But the bond won't reach its face value until enough interest has accumulated.  This could take 10-20 years, depending on the bond's interest rate.

You can go to the Treasury Direct website for more information:

http://www.savingsbonds.gov/indiv/resear...