US Savings Bonds

A complete overview of EE Series Bonds, Part II

(c) Copyright 2006 by Harold Pennington 

The US Treasury has a great website called ‘TreasuryDirect’ where you can log on and purchase, manage, and redeem Electronic EE Series Bonds safely and securely. In addition, a new program they’ve recently launched called 

“SmartExchange” allows you to convert your Series E, EE and I paper Savings Bonds to electronic securities in a special conversion-linked account online! 

Even your existing paper bonds can take advantage of these online options. Since paper EE Series Bonds are still available through most local financial institutions or payroll deduction plans, this is an increasingly popular option. 

Differences in Paper v/s Online EE Series Bonds

Electronic EE Bonds are a little more ‘direct.’ They are made for convenience, so there is no risk of selling before the bond has matured. 

Electronic EE Series Bonds:

• Are sold at face value; i.e., you pay $50 for a $50 bond and it’s worth its full value when it’s available for redemption. (Which is relatively much quicker)
• Can be purchased in any amount of $25 or more, to the penny you want to pay.
• Has an upper limit of $30,000 that you can purchase in one calendar year.
• Is issued electronically to your designated account, instantly.
• Can be watched online daily.

Buying Paper EE Series Bonds is much more traditional. If you just want the great value of this type of bond, but are a traditional investor who doesn’t need at the technically enhanced advantages of the online treasury system, then paper might be the way to go. Also, you don’t have to put the full amount down for the Paper version, so it really acts like a bond half its’ size. 

Paper EE Series Bonds:

• Are sold at half their face value. You would pay $25 for a $50 bond, but it’s not worth its face value until it has matured. (which takes twice a long as with the e-bond)
• Can only be purchased in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000.
• Have the same $30,000 maximum purchase in one calendar year.
• Are issued as paper bond certificates.

Also, if you redeem any EE Series Bond in the first 5 years, you’ll forfeit the 3 most-recent months’ interest. If you redeem them after 5 years, you won’t be penalized.