What are Series HH Bonds?

Series HH bonds are savings bonds issued by the United States Treasury. The Treasury stopped producing these bonds in 2004. For people who hold series HH bonds, the bonds will continue to earn interest until they are cashed in or until they reach maturity, at which point the bond can be exchanged for its cash value. Savings bonds are regarded as a very sound investment because they are backed by the full faith and credit of the United States Treasury, and they are a very safe place to keep one's money, although the interest may not be as high as for other types of investments.

The goal of savings bonds from the perspective of the government is to gain access to supplies of cash. People who buy savings bonds are essentially loaning money to the United States Treasury, and they are receiving interest in exchange. Savings bonds also reward thrift among citizens by creating an incentive to save. The more money people put into savings bonds, the more interest they will earn, and taxes are waived or deferred, depending on the series of the bond. This encourages people to set money aside.

In the case of the series HH bond, there was no limit on the amount of bonds which could be purchased annually, and bonds were available in face values from $500 United States Dollars (USD) to $10,000 USD. People could also exchange series EE/E bonds for series HH bonds, until 31 August 2004 when the HH series was discontinued.

The big advantage to using series HH bonds was that they provided an immediate return on investment, in the form of interest payments deposited into the bank account of the bondholder every six months. This contrasts with more traditional bonds, in which interest accrues on the bond monthly and is paid out when the bond reaches maturity or is cashed out. The ability to earn interest payments right away was very appealing to some investors, making the HH series a popular choice.

Depending on when the bonds were issued, interest rates were fixed for various periods of time, and adjusted after the fixed period expired. Local and state taxes did not need to be paid on the interest, although federal taxes still applied. People who are interested to know how much interest their series HH bonds or other savings bonds are earning can look them up on the Treasury website, which also features information about other savings bonds and Treasury securities.