Savings bonds may be seen as an outdated method of saving, but they're especially useful for anyone who can only put away $50 to $100 at a time or anyone who doesn't have a retirement plan. The bonds offer a return that's competitive with things like a bank CD, money market funds, Treasury bills, and savings accounts. Plus the income from the bonds is exempt from state and local taxes and you can control when you cash in the bonds and when you pay the tax.

    It is important to remember that the bonds stop accruing interest once they are over 30 years old so be sure to check your old bonds and redeem any that are older than that. Or, you can convert the outdated bond into a newer version that is paying interest. 

    When looking for new bonds, consider these facts:
 

• If you plan to purchase I-bonds, do so before Nov. 1 because that's when yields get reset. I-bond have a guaranteed interest rate of 3.3%, plus the inflation rate (last counted at 1.75%) for a total yield of 5.05%. If the inflation rate increases, it will be applied to new and old bonds, but the guaranteed interest rate may decrease on the newer versions. If you buy before Nov. 1, you can lock in the interest rate.
• Bonds bought before May of 1995 pay interest only twice a year. The best time to redeem them is immediately after the interest has been credited.
• Bonds bought between October 1994 and April 1995 have an unusual feature. At the five-year anniversary mark, they carry an unique kicker that amount to six months of interest of 16%.