I am one of the 55 million Americans who own savings bonds. Almost all of those bonds are the old-fashioned paper ones, like mine. And my guess is that most of us do the same thing with our savings bonds: put them away and forget about them. That’s okay for a while, but any financial asset needs to be reviewed periodically. I did that last week, and here are the things I thought about.
How much is my bond worth? This is the easy part, and it’s what everyone wants to know. I used the Treasury’s calculator at http://www.treasurydirect.gov/indiv/tools/tools_savingsbondcalc.htm.
How old is that bond? EE Savings Bonds reach “final maturity” at 30 years, meaning that they no longer earn any interest after that. I was amazed to discover that I have one (the one from 1985) that will reach final maturity next year. That means it’s almost time to cash it in and put the money to work somewhere else.
How much is it earning? To decide whether to hang onto them or cash them in, you need to know how much interest they are earning. On the EE/E Savings Bonds Rates and Terms section at Treasury Direct, scroll down to select the time period your bonds were issued.
Where can I cash in a bond? Most financial institutions will redeem savings bonds, but it’s best to call beforehand. Some will only redeem those for those having an existing account there, or may have a limit on the amount that may be redeemed.
When’s the best time to cash a bond? For bonds issued before May 1997, interest is only added every six months – on the first of the month it was issued, and six months from that. There’s another quirk that applies to all EE bonds: All bonds have an “original maturity date” or “original term.” The Treasury guarantees that a bond will be worth at least double the purchase price on its original maturity date.
The bonds I inherited from my dad were purchased in 1999 and 2000. Their original maturity is 17 years. By my calculations, that’s an overall interest rate of 4.16%. That’s huge compared with their current rates. If I hold them until the 17-year anniversary, I’ll essentially get a bonus.
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