US Savings Bond interest

The current US Savings Bond interest rate that a US saving bond is earning and the length of time that this US savings bond interest rate will be provides a measurement for the US saving bond 's future value. Understanding US savings bond interest helps US savings bond owners compare US savings bonds.

As with Treasury securities (treasury notes or treasury bonds), a high US savings bond interest rate (or coupon rate) gives one US savings bond a greater future value than another US saving bond with a lower US savings bond interest rate, providing both US savings bonds have equal redemption value at present. If a US savings bond owner wants to cash half of his or her US savings bonds, it is useful to be able to differentiate between the worst performing US savings bonds and the best performing US savings bonds in order to cash out the right US savings bond for the situation.

Cashing out US Savings Bonds using US savings bond interest - an example

'Mr. US savings bonds owner' owns 150 US savings bonds. The total value of Mr. US savings bonds owner's portfolio is $100,000-$30,000 of which is deferred US savings bond interest. Mr. US savings bonds owner wants $50,000 from his US savings bonds, but don't know which US savings bonds to cash.

Should Mr. US savings bonds owner cash the oldest US savings bonds?

Or, should Mr. US savings bonds owner cash the newest US savings bonds?

The correct way to find out which US savings bonds should be cashed out is to examine the interest rate of each US savings bond. In this case, Mr. US savings bonds owner should examine:

• the issue dates of the US savings bonds,
• US savings bond series, and
• face values of the US savings bonds.

After analyzing the above information of each US savings bond, Mr. US savings bond owner discovers that half of his US savings bonds are earning 4% while the other half of his US savings bonds are earning 6%. Thus, Mr. US savings bond owner should cash out the US savings bonds that are earning the lowest US savings bond interest first. In this case, Mr. US savings bond owner should cash out the US savings bonds earning 4% first, leaving the other US savings bonds to accumulate earnings at 6%.

By simply comparing US savings bonds interest, Mr. US savings bonds owner has just realized an additional $1,000 a year in US savings bond interest.

Don't redeem the US savings bonds by age

Age of US savings bonds should not be the sole determining factor when deciding which US savings bonds to cash. US savings bond yield plays a significant role in deciding which US savings bonds to redeem and needs to be considered.