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The interest is added to the bond and when you cash in, you get your investment and the compounded interest.
Almost all banks, credit unions and savings and loans unions sell savings bonds. You can walk in any bank and purchase a bond by filling out an application and paying the required money. You can also purchase savings bonds from the Federal Reserve Bank or any of its branches that serve the area you live in.
You can also opt to buy savings account directly from the US Treasury Department by using their website and opening an account.
It is better to buy a savings bond toward the end of the month since all bonds start earning interest from the first day of the month immaterial when they are bought. Even experts will give you the same advice.
Although savings bonds are secure and safe investments, the interest rates offered are lower than stocks and other investments. In addition, if you cash in the bonds before 5 years, there is a penalty. You will not be paid the last three months’ interest.
Interest rates of savings bonds are dependent on the market and if interest rates are high, your bond will also have high interest rate. If interest rates are low, your bond will have low interest rate. This is the reason why it is difficult to predict the returns from a savings bond. This said, most savings bonds are made of increase in value and if you keep them until maturity, you will have substantial returns to make it worthwhile.
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