How long does it take for Series EE bonds to mature?

When do savings bonds mature?

Savings bonds mature at a variety of different times, depending on the series you hold.

Series I savings bonds, commonly referred to as “I bonds,” fully mature after 30 years. However, you can redeem them as early as one year after purchase. If you do redeem them early, you’ll give up the last three months of interest, so you’ll need to make sure you really need the money if you want to cash out early.

Series I bonds offer a fixed rate of interest plus an inflation adjustment. As of November 2021, the I bond rate is 7.12%.

Series EE savings bonds also mature after 30 years. Like I bonds, they will earn interest until they are redeemed. Series EE bonds differ from I bonds in two main ways:

  • They offer a fixed interest rate for the life of the bond. The current rate is 0.10% annually.
  • They offer a one-time adjustment to double the face value after 20 years of ownership.

Series HH bonds are formerly issued savings bonds that matured after 20 years. The last batch will finally mature in August 2024 since the final HH bonds were issued in August 2004.

Given the nature of savings bond math (more on this later), it’s better to hold your savings bonds as long as you reasonably can to take advantage of accrued and compound interest. Allowing your bond to build value over time is a smart move, which is also why you should only dedicate money to savings bonds that you can afford to be without for some time.

Accrued and compound interest

The term “accrued”, in the world of savings bonds, is simply another way to say “accumulated.” Your bonds accrue interest from the moment you purchase the bonds. On the last day of each month, your bond’s value will increase by the amount of interest you’re owed for the time you’ve held the bond.

For newly issued savings bonds, interest compounds semiannually. This means that every six months, the interest you’ve accrued is added to the bond’s value at the beginning of the period. This amount becomes the new (higher) principal, which, in turn, will earn a greater amount of interest over the next period. This is the very essence of compounding, a concept that serves as the bedrock of long-term investing success.

It’s critical to note that the longer you hold your savings bonds, the longer you’ll accrue interest that compounds over time.

Image source: Getty Images.

Image source: Getty Images.

Video

To build an inventory of paper bonds:

  1. Repeat the above process for each of your paper bonds.
  2. The Calculator will add each new paper bond to the top of your inventory listing.

How to Calculate the Value of Savings Bonds

Savings bonds are considered one of the safest investments you can buy.  The basic theory is that the value of a savings bond increases over time, but it’s easy to lose track of its worth over a long period of time. 

Luckily, TreasuryDirect’s savings bond calculator makes it simple to find the value of a purchased savings bond. To calculate the value of your savings bond, you’ll need to know the bond series, face value, serial number, and issue date. 

For example, if you purchased a $50 Series EE bond in May 2000, you would have paid $25 for it. The government promised to pay back its face value with interest at maturity, bringing its value to $53.08 by May 2020. A $50 bond purchased 30 years ago for $25 would be $103.68 today.  

Here are some more examples based on the Treasury’s calculator. These values are estimated based on past interest rates. Future interest rates will vary. 

Face ValuePurchase Amount20-Year Value (Purchased May, 2000)30-Year Value (Purchased May, 1990)
$50 Bond$25$53.08$103.68
$100 Bond$50$106.16$313.52
$500 Bond$250$530.80$1,036.80
$1,000 Bond $500$1,061.60$2,073.60

Pro Tip The longer you hold a savings bond—up until its point of  maturity—the more it’s worth when you cash it in.

Interest accrual and compounding on Series EE bonds

Series EE bonds issued after 2005 accrue interest at a fixed monthly rate, which is compounded semi-annually. If you have bonds bought prior to that, especially paper bonds, the U.S. Treasury offers a savings bond calculator that can help you figure out what you’ve earned — and what your bond is worth today.

When deciding when to cash in your Series EE savings bonds, wait until after the compounding date. You can get an idea of when to expect your interest to be added to your bond with this chart:

Month of Series EE bond issue Month (first day) interest will be added
January or July January or July
February or August February or August
March or September March or September
April or October April or October
May or November May or November
June or December June or December

How does a savings bond work?

Savings bonds have been around since 1935, as a result of legislation passed by President Franklin D. Roosevelt. Bonds were created to help Americans save money and to give the government funds to support efforts such as World War II. When you buy a U.S. savings bond, you’re essentially lending money to the United States government through the Department of Treasury.

The types of savings bonds available for purchase have changed over the years. For example, Series HH savings bonds are no longer sold. Here’s the rundown on Series EE and Series I bonds, the two types of savings bonds sold today.

Series EE bonds

Series EE savings bonds earn a fixed rate of interest each month for up to 30 years. The rate for new bonds is announced by the Treasury each year on May 1 and November 1. EE bonds purchased before May 2005 have variable interest rates. This type of bond is available in an electronic form and can be purchased in penny increments starting at $25 and up to a maximum of $10,000 per calendar year.

Series I bonds

Series I savings bonds earn a fixed rate of interest that’s adjusted for inflation twice a year. Like Series EE bonds, electronic Series I bonds are available in penny increments of $25 to $10,000 per calendar year. Paper Series I bonds (available for purchase only when filing a federal income tax return) are available in amounts of $50, $100, $200, $500 and $1,000 only.

How much are savings bonds worth?

Savings bonds earn interest for 30 years, but rates are relatively low. In May 2020, the U.S. Department of Treasury declared a 0.10% rate for Series EE savings bonds and a composite, or combined, 1.06% interest rate for Series I bonds through Oct. 31, 2020. These rates are comparable to the interest you can earn on some savings accounts but lower than that of some certificates of deposit and money market accounts.

Interest earned on savings bonds is exempt from state and local taxes, and federal income tax is deferred until you cash in your bond or it matures — whichever happens first. If you plan to use savings bonds to pay for qualified education expenses, you may get additional federal tax benefits.

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Alternatives to Series EE Bonds

You can decide whether these bonds make sense for your portfolio when you understand how long it takes Series EE savings bonds to mature. You can choose another option if savings bonds aren't the right fit for you. Broadly diversified blue-chip stocks that earn 3% to 4% returns might be one option.

Stocks may be a much better option, considering the trend in low-interest rates, if you can tolerate higher levels of risk and don’t mind seeing your account value go up and down. You’re in it purely for the cash income and don’t mind some volatility. You and your adviser can decide what works best based on your own needs, goals, and resources.

Need to re-save an inventory you’ve updated?

You must follow the instructions for saving your inventory (above) once you’ve updated the values or added or removed paper bonds. If you’d like more detail, check out our Instructions for Saving Your Inventory Page.

Note: The Calculator won’t save your inventory of paper bonds if you’re using either of these browsers: Google Chrome, Microsoft Edge.

Series I Bonds

Series I bonds are sold at face value and mature after 30 years. Redemption rules are the same with Series I bonds as Series EE bonds. The composite rate for Series I bonds issued from Nov. 1, 2019, through April 30, 2020, is 2.22%. This rate applies for the first six months that you own the bond.

How Are EE Bonds Taxed?

EE bonds are exempt from state and municipal income taxes, unless they are willed to or inherited by someone else. You will owe federal income taxes on interest income earned on EE bonds. You can pay these one of three ways: annually, at maturity or when the bond is cashed. Just note that once you opt to pay taxes annually, you must keep paying them each year; you can’t switch to at maturity or when the bond is cashed. You may be able to avoid all taxes, including federal, on EE bonds, if you use them to pay for qualified higher education expenses.

The owner of an EE bond is liable for tax payments, regardless of who purchased it. This means if you received an EE bond as a gift, you are responsible for paying taxes on it. If an EE bond is co-owned, each owner is responsible for one-half of the tax liability.

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Bottom Line

U.S. saving bonds make low-cost, low-risk savings vehicles for investors working toward long-term financial goals. The Treasury Department currently sells two types of savings bonds. Series EE bonds earn fixed interest for 30 years and are guaranteed to double in value after 20 years. Series I savings bonds earn rates adjusted for inflation but also mature and stop earning interest after 30 years.

The Bottom Line

If you’re thinking about investing in savings bonds, it’s important to know how they work and the impact they can have on your investment strategy. You are loaning your money to the government for a long time, and the government promises to pay you back with interest later. 

“The overall economy is the real concern,” said Troy Harmon, CFA, and chief investment officer at Henssler Financial, a Georgia-based financial advising firm. “I think the numbers can confirm we are in a recession currently.” During tough financial times, Harmon says savings bonds are a good way to diversify your portfolio and manage your risk. The returns are not as lucrative as stocks could be, but they are guaranteed. 

Lisa Bernardi contributed to this article.

How do you redeem a Series EE bond?

You can redeem your electronic Series EE bonds directly through the TreasuryDirect website. Paper bonds are no longer issued, but you can cash existing paper bonds at most financial institutions.

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