How Do Savings Bonds Work?
The time it takes a savings bond to reach face value depends on the series of bond Series EE bonds mature after 30 years, meaning they can earn interest for that will do a one-time adjustment to bring the bond's value to equal face value.does
Dear Dr. How do we determine which ones to cash in? Do we go by the interest rate or the yield percent? Your savings bonds are all past the early redemption penalty. Series EE savings bonds earn interest for 30 years. The oldest of your bonds still has another 10 years until final maturity.
Series EE savings bonds are issued with a cost that is one-half the face amount. The U. Treasury guarantees that your bond will double in value to reach face value after 20 years. If it's under face value at this point, the Treasury will perform a financial adjustment to bring it up to the maturity amount. The rate of growth in the value of a Series EE savings bond is based on the interest rate the bond is earning. Bonds sold since May earn a fixed rate until the bond is redeemed. What's special about these bonds is the U.
Why Zacks? Learn to Be a Better Investor. Forgot Password. Did Aunt Helen faithfully buy you a United States savings bond for every birthday, when you would rather have had a gift certificate to a favorite store? You can still buy paper Series I bonds using your tax refund. Different types of savings bonds have different maturity dates. Most range between 20 and 30 years.
The time it takes a savings bond to reach face value depends on the series of bond and the value at which it was sold. There are three different series of bonds. EE bonds are sold for half of face value, and the U. Treasury Department guarantees that they will reach face value after 20 years. If the interest payments don't cause the bond to reach full face value at the end of 20 years, the government will do a one-time adjustment to bring the bond's value to equal face value. It's important to keep in mind, however, that EE bonds must be owned for at least one year before redemption. If they are redeemed before five years, the last three months' worth of interest is forfeited, but after five years, they can be redeemed with no penalty.
Why Zacks? Learn to Be a Better Investor. Forgot Password. The U. Treasury recommends EE bonds as a safe and patriotic investment with the full backing of the U. Paper EE bonds used to be available through savings institutions, but now the Treasury sells electronic EE bonds online at TreasuryDirect. EE bonds have two maturity dates and earn interest until final maturity.
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Know rate before cashing savings bond
While purchasing U. Treasury bonds, you may have noticed some Series EE savings bonds mature on different dates. For example, the U. Treasury's EE bonds issued in and only took eight years to reach full face value, while the same EE bonds issued in took 20 years to reach their full face value. These drastically different maturity dates result from the differing rates of interest built into each Series EE bond when it is issued.
Savings bonds are one of the world's safest investments. Backed by the full faith of the U. Government, savings bonds offer a safe place to build savings for the long-term at the cost of a relatively low investment return. They're purchased at a discount to their face value, and accrue interest monthly based on a fixed rate at the time they are issued. The bonds mature after 20 years, at which point the U.