Series HH Bond
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 in light of a coupon rate. The coupon was locked in at a fixed rate for the first decade, after which the U.S. Treasury reset it until the end of the bond's life.
Series HH bonds are presently not accessible 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 planned with terms that spoke to the long-term investor. Starting in Nov. 1982, Series HH bonds were just accessible in exchange for Series EE/E bonds endless supply of matured Series H bonds.
The majority of individuals who purchased these bonds utilized them to supplement retirement income since they gave interest until maturity. Series HH bonds were sold at face value, meaning a $500 bond sold for $500, and made accessible in the following denominations:
- $500
- $1,000
- $5,000
- $10,000
Bondholders who invested in this series received paper certificates. There was no capital appreciation potential, meaning interest earned on this bond series was not added to the principal. Instead, it was paid out like clockwork into the bondholder's account by direct deposit. The bond took into account early redemption and exchange options following six months.
Series HH bonds paid a fixed interest rate that was set upon the arrival of purchase and locked in for the following decade. When the 10-year locked-in rate expired, the coupon rate fell as low as 1.5% for some Series HH bondholders. Calculating the real return would assist investors with determining whether it was savvy to hold onto the bonds, or redeem them and utilize the capital in higher-yielding securities.
Taxation
Interest on Series HH bonds was exempt from state and nearby income taxes. In any case, investors were required to report earnings from these bonds on their federal returns. Bondholders must file 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 versus Series EE Bonds
There are a few likenesses between the Series HH and 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 just benefits from the investment gains at the time the bond is liquidated. Conversely, the Series HH bond paid interest income to bondholders like clockwork until maturity or redemption, while the principal value of the bond remained something similar.
Interest payments were put aside consequently through direct installment to the bond proprietor's account at regular intervals. Consequently, Series HH bonds engaged risk-averse investors seeking standard income from their investments. Since Series HH bonds had the backing and full faith and credit of the U.S. government, they were viewed as a safe investment.
Features
- The Series HH bond's coupon was locked in at a fixed rate for the first decade, after which the U.S. Treasury reset it until the end of the bond's life.
- Series HH bonds were sold at face value and came in denominations of $500, $1,000, $5,000, and $10,000.
- The U.S. government stopped selling Series HH bonds after Aug. 31, 2004, and didn't supplant them with another bond program.
- The Series HH bond was a 20-year, non-marketable savings bond issued by the U.S. government that paid semi-annual interest in light of a coupon rate.
