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About Series EE Savings Bonds
Series EE Savings Bonds, or EE Bonds, are
a type of savings bond offered by the U.S. Treasury Department. First issued in
1980, the EE Bond replaces the Series E Bond. Series
EE Bonds are frequently the type of savings bond people think of when they
refer to savings bonds. In addition to EE Bonds, Series I Savings
Bonds and TIPS are available to individual investors from the Treasury. Although
Series EE Bonds have been produced since 1980, there are several
different types of EE Bonds with different attributes depending on when the bond
was issued.
Types of EE Bonds
Although all EE Bonds may look the same, there are four types
of EE Bonds that have been issued, each with a different method of earning interest.
The type of EE Bond can be identified by the issue date of the
bond.
Issued 1980 through April 1995 - Bonds purchased in this time earned interest
on a graduated scale for 5 years and then started earning interest at either guaranteed
minimum rates or market-based rates, whichever is higher. The guaranteed minimum
rate was set at the time of purchase while the market rate is based on the 5-year
U.S. Treasury securities yields calculated semiannually. The rate is set at 85%
of the average of these yields.
Issued May 1995 through April 1997 - EE Bonds issued in
this period contain a short-term and long-term rate. The rates are based on the
market yields for U.S. Treasury securities. The short-term rate is used for the
interest payments for the first five years of the bond's issuance, which is based
on 85% of the 3-month averages of 6-month U.S. Treasury Security yields. From years
5 through 17, the bond applies the long-term rate, which is 85% of the 6-month average
of five-year U.S. Treasury security yields. EE Bonds will continue to earn interest
from 17 years through 30 years at the rates in effect at that time.
Issued May 1997 through April 2005 - These EE Bonds earn
interest based on the 5-year U.S. Treasury security yields at 90% of the average
yield during the preceding six month period.
Issued May 2005 to present - The most recent type of EE Bonds
earn a fixed rate of interest, which is determined by adjusting the market yields
of the 10-year Treasury Note by the value of components unique to savings bonds,
including early redemption and tax deferral options. The fixed rate is valid for
the lifetime of the bond and will not change even when new rates are announced. EE bonds mature after 20 years, but continue to earn interest for an additonal 10 years, making the lifespan of these bonds 30 years.
Patriot Bonds - Some EE Bonds issued after December 10,
2001 are referred to as Patriot Bonds, but are identical to EE
Bonds except for the words "PATRIOT BOND" included at the top of the bond. The bonds
behave like EE Bonds issued at the same time and have no special attributes that
impact interest rates. Some consider the Patriot Bond a gimmick or otherwise a marketing
scheme to interest people in funding the anti-terrorism efforts of the country when
a Patriot Bond and a regular EE Bond are both
as likely to be funding those efforts.
EE Bond Terms
The latest form of EE Bonds earn interest for 30 years at a fixed
rate of interest. The paper version of these bonds mature after 20 years, at which
point they are guaranteed to double in value. In the event the bond has not doubled
in value after 20 years due to a low fixed rate, the U.S. Treasury will make a one-time
adjustment at maturity to increase the value to ensure it has doubled and match
the face value on the bond certificate. Electronic EE Bonds are issued at face value
and reache maturity immediately. EE Bonds are accrual-type securitues, meaning interest
is added monthly and paid when the bond is redeemed. Newly issued Series EE and
I Savings Bonds receive new rates twice a year, on May 1 and November 1. Savings
bonds must be held for a minimum on one year and will suffer a three-month interest
penalty if redeemed within 5 years.
January 1980 - October 1980 |
11 years |
November 1980 - April 1981 |
9 years |
May 1981 - October 1982 |
8 years |
November 1982 - October 1986 |
10 years |
November 1986 - February 1993 |
12 years |
March 1993 - April 1995 |
18 years |
May 1995 - May 2003 |
17 years |
June 2003 - December 2011 |
20 years |
EE Bond Risk
EE Bonds are very low risk investments. Unlike corporate or municipal
bonds, savings bonds are backed by the whole of the US government and are therefore
very stable. All savings bonds products are designed to retain value and never decrease,
so you will never lose money with savings bonds. While risk are reward are typically
associated with investing, savings bonds frequently offer better rates than products
of a similar risk profile, making them an ideal way to save for the long term with
almost no risk.
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Page last modified 1/31/2012