Savings bonds for grandchildren can be purchased directly from the U.S. Treasury through TreasuryDirect.gov, the government's online platform. Both an account for the purchaser and a linked account for the grandchild are needed. The grandchild's Social Security Number is required for registration. In the "BuyDirect" section, purchasers can choose EE or I bonds and gift them from their account's Gift Box.
The Best Savings Bonds for Grandchildren
Series EE bonds are the steady Eddies of the bond world—reliable and predictable. They earn a fixed rate, and here's the kicker: They're guaranteed to double in value after 20 years.
You can gift a savings bond to adults or children. A child under 18 can have a TreasuryDirect account if the child's parent or other adult custodian has a TreasuryDirect account and sets up a linked account for the child. In TreasuryDirect, you can give anyone either EE or I savings bonds.
What Type of Savings Accounts Can You Open for a Grandchild?
They are sold at face value, so you'll pay $50 for a $50 bond. The bond is worth its full value upon redemption.
Savings bonds for kids provide a reliable way to set aside money for the future while benefiting from government-backed security. I bonds, which are issued by the U.S. Treasury and earn interest that adjusts for inflation, are one option for your children or grandchildren.
Cons of savings bonds
Flexibility: Savings bonds aren't very flexible. They're locked in for at least a year and incur a penalty of the last three months' interest if redeemed in less than five years.
The best time to cash savings bonds (Series EE and I bonds) is typically after 5 years to avoid the 3-month interest penalty, or at their full 30-year maturity for maximum earnings, but you should cash them as soon as they've matured (stopped earning interest) to prevent value loss from inflation, using the TreasuryDirect Savings Bond Calculator to check values and maturity dates. You can redeem them anytime after one year, but holding them longer generally yields more interest, up to the 30-year limit.
Buying for someone else's child:
The child's parent or guardian must give you permission to share their information with us. If the child and parent/guardian are not already NS&I customers, we'll ask the parent/guardian to provide proof of their own and their child's identity.
CDs are best for short-term, low-risk savings, while bonds can offer higher yields with more complexity and risk. Rising interest rates favor CDs, while bonds may lose market value as rates increase.
The best account for a grandchild depends on your goal: a 529 Plan is ideal for tax-free education savings; a Custodial Account (UGMA/UTMA) offers broad flexibility but transfers control at adulthood; a Custodial Roth IRA is great for retirement if the child has earned income; while a simple High-Yield Savings or TreasuryDirect Savings Bond works for short-term goals with less investment risk, providing flexibility for general use.
Warren Buffett views bonds as a safe haven for cash, often recommending a 90/10 portfolio (90% S&P 500 index fund, 10% short-term government bonds) for average investors, while Berkshire Hathaway itself holds large amounts of U.S. Treasury bills for capital preservation and to earn competitive yields, especially when stocks are expensive. He favors short-term Treasuries (T-bills) due to low interest rate risk and high liquidity, using them to park cash while waiting for better stock opportunities, rather than as a primary growth engine.
I bonds, with their inflation-adjusted return, safeguard the investor's purchasing power during periods of high inflation. On the other hand, EE Bonds offer predictable returns with a fixed-interest rate and a guaranteed doubling of value if held for 20 years.
What tax advantages do Series EE and Series I savings bonds offer? You don't have to pay state or local income tax on them. You can choose not to pay federal income tax on them until you cash them or they mature, whichever is first.
Treasury securities are considered one of the safest investments because they are backed by the U.S. government. They're issued in different maturities, ranging from a few days to 30 years, allowing investors to choose the term that best fits their investment goals.
The bond becomes payable to the estate of the deceased and probate of the estate may be required. If there is a court appointed representative, the bonds will be payable to the estate and administered according to the decedent's Will. If there is no Will, the bonds will pass according to the state intestacy laws.