Do you have old paper U.S. savings bonds sitting around? Introduced in 1935, paper bonds were once the go-to gift for weddings, birthdays and other occasions.
There are three things you need to know about those old bonds to determine what they are worth and whether you should redeem them: the type of bond, the maturity date, and whether they have matured or are still gathering interest.
Three basic types of bonds
- E bonds, and EE bonds issued more than 30 years ago, have matured and are no longer paying interest.
- I Bonds: Those issued more than 30 years ago have matured.
- H/HH: All H bonds, and HH bonds issued more than 30 years ago, have matured and are no longer paying interest.
Determine if the bond pays interest
To determine if your bond is still paying interest, go to the Treasury Department’s Savings Bond Wizard. If it is still earning interest, you can keep the bond until it matures, or, if you think you could get a better return elsewhere, cash it in and put the money into a different and presumably better investment. If you decide to cash in the bond, whether mature or not, the interest is subject to federal income tax. However, if you are going to college or graduate school, you may be able to avoid the tax consequences and use the interest from EE and I bonds to pay for your educational expenses. Read more about that here.
Not every bank will cash savings bonds, so call around first to find one that will. The Treasury Department website does not maintain a list, unfortunately.
Today, paper bonds are no longer issued. They can be purchased electronically only. If you don’t plan to redeem your paper bonds, it’s a good idea to convert them to electronic format using the Smart Exchange program.
Bonds inherited from someone who’s passed away
What about bonds that are inherited from a decedent, such as Series E bonds, which grow tax-deferred and therefore no income tax has been paid on the appreciation? (Unlike H bonds, which pay interest semi-annually). Since E Bonds are income tax-deferred, not tax-exempt, income tax must ultimately be paid. And unlike stocks with capital appreciation, there is no step-up in basis, which would provide income tax-free passage of the appreciation. The income tax can be paid as income with respect to the decedent (on the the decedent’s final income tax return), or may be paid by the beneficiary of the bond.
There are a numerous other rules that apply to purchasing, passing on and redeeming bonds. I suggest you check out TreasuryDirect.gov if you have additional questions: click here. (This link takes you to the section on EE bonds, but there are also clickable links for other types of bonds.)
FAQs
How to get the most value from your savings bonds
| Face Value | Purchase Amount | 30-Year Value (Purchased May 1990) |
|---|
| $50 Bond | $100 | $207.36 |
| $100 Bond | $200 | $414.72 |
| $500 Bond | $400 | $1,036.80 |
| $1,000 Bond | $800 | $2,073.60 |
We guarantee that the value of your new EE bond at 20 years will be double what you paid for it. (If you have an EE bond from before May 2005, it may be earning interest at a variable rate. See more at EE bonds.) We guarantee that the interest rate of an I bond will never fall below zero.
How long does it take for a $100 EE savings bond to mature? ›
All Series EE bonds reach final maturity 30 years from issue. Series EE savings bonds purchased from May 1995 through April 1997 increase in value every six months.
What is the interest rate on EE savings bonds? ›
EE bonds issued from November 1, 2023 through April 30, 2024 bear an interest rate of 2.70%. They will earn that interest rate for the first 20 years you hold the bond and may be adjusted after 20 years.
How much is a $50 Patriot bond worth after 20 years? ›
After 20 years, the Patriot Bond is guaranteed to be worth at least face value. So a $50 Patriot Bond, which was bought for $25, will be worth at least $50 after 20 years. It can continue to accrue interest for as many as 10 more years after that.
When should I cash in EE savings bonds? ›
You can get your cash for an EE or I savings bond any time after you have owned it for 1 year. However, the longer you hold the bond, the more it earns for you (for up to 30 years for an EE or I bond). Also, if you cash in the bond in less than 5 years, you lose the last 3 months of interest.
Is there a penalty for not cashing EE bonds after 30 years? ›
While the Treasury will not penalize you for holding a U.S. Savings Bond past its date of maturity, the Internal Revenue Service will. Interest accumulated over the life of a U.S. Savings Bond must be reported on your 1040 form for the tax year in which you redeem the bond or it reaches final maturity.
Are EE bonds ever worth more than face value? ›
The bond isn't worth its face value until it matures. (The U.S. Treasury Department no longer issues EE bonds in paper form.) Electronic Series EE Bonds are sold at face value and are worth their full value when available for redemption.
Are EE bonds taxable? ›
With electronic Series EE bonds, the redemption process is automatic and interest is reported to the IRS. Interest earnings on bonds are reported on IRS Form 1099-INT. It's important to keep in mind that savings bond interest is subject to more than one type of tax.
Which is better, EE or I savings bonds? ›
The interest rate on I bonds is adjusted every six months depending on inflation. With TIPS, it's the principal that's adjusted. Either way, both are hedges against inflation. In contrast, an EE bond has a fixed interest rate that's determined at the time you buy it.
- iShares Core U.S. Aggregate Bond ETF (AGG)
- Vanguard Total World Bond ETF (BNDW)
- Vanguard Core-Plus Bond ETF (VPLS)
- DoubleLine Commercial Real Estate ETF (DCRE)
- Global X 1-3 Month T-Bill ETF (CLIP)
- SPDR Portfolio Corporate Bond ETF (SPBO)
- JPMorgan Ultra-Short Income ETF (JPST)
- iShares 7-10 Year Treasury Bond ETF (IEF)
Interest is credited on the first day of each month and compounded semiannually. Interest accrues beginning with the fourth month from the issue date. For example, a bond issued in January has interest first credited on May 1, which represents one month of interest because of the 3-month interest penalty.
Do savings bonds double every 7 years? ›
Series EE savings bonds are a low-risk way to save money. They earn interest regularly for 30 years (or until you cash them if you do that before 30 years). For EE bonds you buy now, we guarantee that the bond will double in value in 20 years, even if we have to add money at 20 years to make that happen.
How can I avoid paying taxes on savings bonds? ›
You can exclude the interest from your series EE and series I U.S. savings bonds on Form 8815 of the 1040. Form 8815 helps calculate the amount of interest that you can exclude from your tax return. If all the interest was not used for a qualified higher education expense you will stay pay taxes on that amount.
Are EE bonds a good investment now? ›
A Series EE Savings bond could be a good investment if you're looking for something that's long term and low risk, since it's backed by the Treasury and is guaranteed to double its value in 20 years. However, 20 years to see only two times your initial investment might not be enough to help you meet certain goals.
Do Series EE bonds expire after 30 years? ›
Maturity dates for Series EE bonds
At 20 years, the government ensures that you will be paid double the face value of the bond. Although they technically mature after 20 years, these bonds actually don't expire for 30 years. You'll keep earning interest for an extra decade.
What is the average bond return for 30 years? ›
30 Year Treasury Rate is at 4.79%, compared to 4.75% the previous market day and 3.84% last year. This is higher than the long term average of 4.74%.
Can you cash a bond after 30 years? ›
They're available to be cashed in after a single year, though there's a penalty for cashing them in within the first five years. Otherwise, you can keep savings bonds until they fully mature, which is generally 30 years. These days, you can only purchase electronic bonds, but you can still cash in paper bonds.
Is there a penalty for not cashing in matured EE savings bonds? ›
While the Treasury will not penalize you for holding a U.S. Savings Bond past its date of maturity, the Internal Revenue Service will. Interest accumulated over the life of a U.S. Savings Bond must be reported on your 1040 form for the tax year in which you redeem the bond or it reaches final maturity.
