The Series HH Bond was a type of U.S. government savings bond that provided investors a safe, interest-bearing investment option. These bonds were available in denominations ranging from $500 to $10,000 and could only be acquired through direct exchange of Series EE or E bonds.
Historical Context
The issuance of Series HH bonds began in 1980 as part of an effort to provide more flexible and advantageous bond investment options for holders of Series E/EE bonds. The final issue date for Series HH Bonds was August 31, 2004, when the U.S. Treasury decided to discontinue the exchange of bonds for HH bonds. This decision did not impact the rights or interest payments to current holders of Series HH bonds, which continued to accrue interest until maturity.
Specifications and Features
Interest Rates and Payments
Series HH Bonds offered a fixed interest rate that was paid semi-annually. The interest rate was set at the time of issuance and remained constant throughout the bond’s lifespan.
Denominations
Series HH Bonds were available in the following denominations:
- $500
- $1,000
- $5,000
- $10,000
Maturity and Redemption
Maturity Period
Series HH Bonds had a maturity period of 20 years, although they stopped earning interest after the first 20 years.
Tax Considerations
Tax Deferral Benefits
One of the significant advantages of Series HH Bonds was the tax deferral on the interest earned from the Series E/EE bonds that were exchanged to obtain them. While Series HH bonds paid interest semi-annually, the interest was subject to federal income tax but exempt from state and local taxes.
Key Dates
- Issuance Commencement: 1980
- Final Issue Date: August 31, 2004
Comparisons with Other Series Bonds
Series EE Bonds
Series EE bonds, unlike HH bonds, accrue interest that is subject to federal income tax at the redemption or maturity time. They can also be purchased directly via TreasuryDirect, rather than requiring an exchange process.
Series I Bonds
Series I bonds are another modern alternative, offering inflation-protected interest rates, which combine a fixed rate with an inflation-adjusted rate.
FAQs
Q: Can I still purchase Series HH bonds? A: No, Series HH bonds are no longer issued as of August 31, 2004.
Q: Do existing Series HH bonds still earn interest? A: Yes, existing HH bonds continue to earn interest until they mature.
Q: Are Series HH bonds subject to state tax? A: No, interest earned on Series HH bonds is exempt from state and local taxes but is subject to federal income tax.
Related Terms
- Series E Bonds: Savings bonds issued between 1935 and 1980.
- Series EE Bonds: Successors to Series E bonds, offering fixed interest rates and sold at a discount.
- Series I Bonds: Bonds that provide inflation-adjusted interest rates.
References
- U.S. Department of the Treasury. (n.d.). “Series HH Savings Bonds Information.” TreasuryDirect.
- TreasuryDirect. (n.d.). “Comparison of U.S. Savings Bonds.”
Summary
The Series HH Bond represents a pivotal chapter in the history of U.S. government savings bonds, offering fixed interest rates, tax deferrals, and flexible redemption options to investors. Although no longer available for purchase after August 31, 2004, existing bonds continue to provide financial benefits to their holders until maturity. These bonds played an essential role in achieving financial stability and investment growth for a wide range of investors over the years.
