US Savings Bonds

Archive for April, 2007

Question: Where can I purchase US Savings Bonds online?

Answer: http://www.savingsbonds.gov/indiv/indiv.htm

Who’s Buying US Treasuries?

Question: Can someone explain to me about Savings Bonds?

I went to the US treasury site about Savings Bonds and I’m a little confused…Is my savings bond from 2000 with the denomination of $100 REALLY not worth $100 til 2030?! I looked at the worth for right now, it’s about $60…

My understanding from the people who started giving my kids Savings Bonds for bdays and xmas was that when they go to college (which is only going to be about 5 yrs from now, which is 2015) they would have A LOT of money, that the bonds accrue interest and I was thinking they could buy books and supplies (b/c I know that stuff is expensive), but it says right on the site that the bonds themselves don’t become of face value until they mature and they don’t mature for 30 yrs!!! What’s the point?! What, my kid can pay his car payment when he’s 30?! I’m just a little put off….

Answer: Two types of bonds “EE” and “I”.

If they are “I” bonds, then they are bought at face value ( 50 dollars buys a 50 dollar bond) and they earn interest each month.
They are worth what you pay for them, plus any interest earned. They are not worth less than the face value ever. If you redeem them for cash before five years, then you will get the purchase price and interest earned, but will forfeit the last 3 months’ worth of interest. If you wait longer than five years, then you do not forfeit any interest.

Most likely they are “EE” bonds. These are purchased at half of face value ( 25 dollars buys a 50 dollar bond) and they also earn interest each month.
They are worth what you paid for them plus any interest earned. They are worth less than the face value until they are “matured”. This is twenty years for “EE” bonds.
These bonds earn interest for thirty years. You cannot cash them in for the first year. From 1 to 5 years, you would receive what you paid for them plus any interest earned, but will forfeit the last three months’ of interest. If you waited longer than five years, then you do not forfeit any interest.
If you waited for twenty years before cashing them in, then their value would be face value (50 dollars if the bond says it is a 50 dollar bond).

They earn interest every month, as you were told. And the interest earned is exempt from local and state taxes. Not exempt from federal taxes, but if used for education, there are deductions that can be taken.

Hope this helps