What Is a Series HH Bond?

The Series HH bond was a 20-year, non-marketable savings bond issued by the U.S. government that paid semi-annual interest based on a coupon rate. The coupon was locked in at a fixed rate for the firs𝓰t ten years, after which the U.S. Treasury reset it for the rജest of the bond's life. 

Series HH bonds are no longer available for purchase, having been discontinued by the U.S. government on Aug. 31, 2004. Bonds that didn't mature continue to receive interest payments.

Understanding Series HH Bonds

The Series HH Savings Bond Program was designed with terms that appealed to the long-term investor. Starting in Nov. 1982, Series HH bonds were only available in exchange for Series EE/E bonds or upon reinvestment of matured Series H bonds.

The majority of people who purchased these bonds used them to supplement retirement income since they provided interest until maturity. Series HH bonds were sold at 澳洲幸运5官方开奖结果体彩网:face value, meaning a $500 bond sold for $500, and made available in the following 澳洲幸运5官方开奖结果体彩网:denominations:

• $500
• $1,000
• $5,000
• $10,000

Bondholders who invested in this series received paper certificates. There was no 澳洲幸运5官方开奖结果体彩网:capital appreciation potential, meaning interest earned on this bond series was not added to the 澳洲幸运5官方开奖结果体彩网:principal. Instead, it was paid outꦐ every six months into the bondholder's account by direct deposit. The bond did allow ꦜfor early redemption and exchange options after six months.

Series HH bonds paid a 澳洲幸运5官方开奖结果体彩网:fixed interest rate that was set on the day of purchase and locked in for the following ten years. Once the 10-year locked-in rate expired, the coupon rate fell as low as 1.5% for many Series HH bondholders. Calculating the 澳洲幸运5官方开奖结果体彩网:real return would help investors dete꧒rmine whether it was wise to hold onto the bonds, or redeem them and us𝓀e the capital in higher-yielding securities.

Taxation

Interest on Series HH bonds was exempt from state and local income taxes. However, investors were required to report earnings from these bonds on their federal returns. Bondholders must file 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) form 1099-INT to report their interest income on their federal tax return the year the interest is earned.

Series HH Bonds vs. Series EE Bonds

There are some similarities between the Series HH and 澳洲幸运5官方开奖结果体彩网:Series EE savings bonds, as well as several key differences.

Interest earned on Series EE savings bonds is returned to the principal value of the bond. This means the bondholder only benefits from the investment gains at the time the bond is cashed. In contrast, the Series HH bond paid interest income to bondholders every six months until maturity or redemption, while the principal value of the bond remained the same.

Interest payments were made automatically via direct deposit to the bond owner’s account every six months. For this reason, Series HH bonds appealed to 澳洲幸运5官方开奖结果体彩网:risk-averse investors seeking regular 🌳inco🧸me from their investments. Because Series HH bonds had the backing and full faith and credit of the U.S. government, they were considered a safe investment.