U.S. savings bonds are issued by the U.S. Treasury and purchased through payroll savings plans and at banks. Paper savings bonds are issued in denominations starting at $50 up to $10,000. The actual value of a savings bond will only be the face amount one time in the bond's life.
U.S. Bond Purchase Price and Interest
Savings bonds -- series EE -- are purchased for one-half of the face amount. For example, a $200 bond is bought for $100. The bond then earns interest and builds value toward the $200 denomination. The initial interest rate is unchanged until the bond is redeemed. Savings bonds earn interest every month and the interest compounds every six months. On the compounding date, the interest earned over the previous six months is added to the value used to compute the monthly interest.
Savings Bond Values
The current value of any U.S. savings bond can be determined using calculators available on the Treasury Direct website. The Tools menu provides an online calculator that gives the current value of a single bond. The website also offers the Savings Bond Wizard software, which can be downloaded and installed in a personal computer. The information for a collection of bonds can be entered into the Savings Bond Wizard and the values will be automatically updated every month.
U.S. Bond Denomination Value
Series EE U.S. savings bonds are guaranteed to reach their denomination value no later than 20 years after issue. This means the $200 bond purchased for $100 will be worth the $200 by no later than the 20-year anniversary of the bond. If a bond has not earned enough interest to double in value then, the Treasury will make a one-time interest adjustment to bring the bond up to the face value.
When to Redeem U.S. Bonds
U.S. savings bonds can be redeemed anytime after one year after the bond's issue month. Savings bonds will continue to earn interest for up to 30 years. The value calculated by the Treasury Direct online calculator is the amount the bond owner will receive if the bond is redeemed during the current month. Bond owners can continue to hold bonds after the 30 year point, but no more interest will be earned.
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U.S. Savings Bonds Overview:
U.S. savings bonds are issued by the U.S. Treasury and can be acquired through payroll savings plans or at banks. They are available in paper form with denominations ranging from $50 to $10,000.
Series EE Savings Bonds:
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Purchase Price and Interest: Series EE savings bonds are initially purchased for half of their face amount. For instance, a $200 bond is bought for $100. The bond maintains its initial interest rate until redemption.
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Interest Accumulation: Savings bonds earn interest every month, with interest compounding every six months. On the compounding date, the interest earned over the previous six months is added to the bond's value, contributing to the overall growth.
Determining Bond Values:
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Treasury Direct Website: The current value of U.S. savings bonds can be calculated using the online calculators provided on the Treasury Direct website. The Tools menu offers an online calculator for individual bonds.
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Savings Bond Wizard Software: The Savings Bond Wizard software, available for download, allows users to input a collection of bonds. The values are automatically updated every month, providing a comprehensive overview.
Guarantee of Denomination Value:
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Series EE Guarantee: Series EE savings bonds are guaranteed to reach their denomination value no later than 20 years after the issue date. This means that a $200 bond purchased for $100 will be worth $200 by the bond's 20th anniversary.
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Interest Adjustment: If a bond has not earned enough interest to double in value by the 20-year mark, the Treasury makes a one-time interest adjustment to bring it up to the face value.
Redemption Timing and Interest:
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Redemption Period: U.S. savings bonds can be redeemed anytime after one year from the bond's issue month.
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Interest Earning Period: Savings bonds continue to earn interest for up to 30 years. The Treasury Direct online calculator provides the current redemption value, and while bond owners can hold them beyond 30 years, no additional interest will accrue.
This breakdown covers the key aspects of U.S. savings bonds, including their purchase, interest, value determination, guarantee of denomination value, and redemption details. If you have any specific questions or need further clarification, feel free to ask.
