One of the more frequent criticisms leveled against U.S. society is our willingness to incur debt -- or, on the flip side, our lack of saving.

It is from savings that the nation supports programs that help make its industries competitive against other nations (the Japanese savings rate is 18 percent a year versus 3 percent in the United States). It also is from this pool that the nation is able to provide the funds to buy federal debt and reduce dependency on foreign money.

Certainly a step in increasing savings is to look at the benefits of the U.S. Savings Bond program. The program offers two types of nonmarketable securities: the Series EE bonds and the Series HH bonds.

Currently there are $98.5 billion in savings bonds outstanding. Here is how they work:

The series EE bonds come in eight denominations ranging from $50 to $10,000. They cost one-half the face amount of the bond -- i.e., $25 to $5,000. The beauty of these bonds is that the interest earned is accrued and compounded semiannually over the life of the bond until they reach maturity.

The EEs may be bought at banks and most financial institutions, through payroll savings at work, and at the U.S. Treasury and Federal Reserve banks.

There are two rates used to calculate the interest on the EEs: the "minimum guaranteed rate" and the "market-based average return rate." If the EEs are held for five years, they will receive the guaranteed rate for those five years. Currently that rate is 6 percent. If they are held less than five years, the EEs receive a specific rate each year that is compounded semiannually and rises each year, until the minimum guaranteed rate is reached in the fifth year. At that point the interest for the five years is calculated at the minimum rate (currently 6 percent).

During the remaining life of the bond, the interest is calculated at 85 percent of the marketable five-year Treasury note every six months (May and November). This is the market-based average rate. Should this rate fall below the guaranteed minimum rate, the minimum rate would be used to calculate the interest rate for that period.

In effect, the minimum rate determines the length of the maturity of the EE bonds because a EE bond with a minimum rate of 7.5 percent, compounding semiannually, will double in value (reach its face value) in 10 years, while it takes 12 years for a EE bond with a minimum rate of 6 percent to reach its face value. Their value at maturity will be at least the face amount -- more if the market-based rate is higher than the guaranteed rate.

The interest earned on the EEs is subject to the federal income tax, but not to state and local taxes. Payment of federal taxes may be deferred until maturity or until the bonds are cashed in or until they reach their final maturity.

The Series HH bonds are purchased in exchange for outstanding EEs, or for the old Es and Savings Notes. Their maturity is 10 years, and they pay interest semiannually, with the interest subject to the same taxes as the EEs. One benefit is that if owners of EEs have deferred the payment of taxes on the earned income, they may continue to do so until the HHs received in exchange are redeemed, disposed of, or reach their maturity, whichever comes first.

The Savings Bond program offers investors a broad array of instruments to help in establishing a savings plan, whether be for retirement, schooling or as gifts. Information is readily available from the Treasury and other institutions. It's worth a look. James E. Lebherz has 28 years' experience in fixed-income investments.