Savings bonds have been a popular investment in the United States since 1935. Though there are many types of savings bonds, the Series EE savings bond might be best known.
Series EE bonds are issued by the Department of the Treasury to help raise money to fund the government. They allow investors to buy bonds in small denominations. These are much lower than traditional corporate or municipal bonds, which can require $10,000 or $100,000 per bond.
Key Takeaways
- Series EE savings bonds allow investors to buy bonds in much smaller denominations than traditional corporate or municipal bonds.
- There are both electronic EE savings bonds and paper Series EE savings bonds, which work slightly differently.
- The maturity date for Series EE paper bonds varies depending upon when the bond was issued.
- If you sell your Series EE savings bonds back to the government within five years, you lose the interest income you were owed for the most recent three months.
What Are the Types of Series EE Savings Bonds?
There are two types of Series EE savings bonds: paper bonds and electronic bonds. These work a little differently from each other.
Electronic Series EE Savings Bonds
Electronic bonds are sold at face value. If you want to invest $50, you will receive a $50 electronic bond. It is worth full value when eligible for redemption.
Electronic bonds can be purchased in amounts of $25 or more, to the penny. If you have $547.32 you want to invest, you can do that. This makes these bonds a great choice for small investors with limited funds.
Purchases of electronic bonds are limited to no more than $10,000 per calendar year. They are issued to a designated account. You won't get a physical paper bond when you buy them.
Physical Paper Certificate Series EE Savings Bonds
As of January 1, 2012, Paper Series EE savings bonds are no longer sold. They once were sold at half of the face value. This means that if you bought a $5,000 face value bond, you would have paid $2,500 in cash.
Paper bonds were once purchased in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000. There was a maximum purchase of $5,000 ($10,000 face value) per calendar year.
If you own paper bonds, you can convert them to electronic ones.
How to Make Money With Series EE Savings Bonds
When you buy a Series EE savings bond, you are lending money to the U.S. government. From time to time, the government changes the rules for savings bonds. This means that how they work depends on when you bought them. According to the Treasury Department, Series EE bonds bought on or after May 1, 2005, are fixed-rate bonds. Those bought during the eight years prior had variable interest rates.
Variable rates can be good in times of inflation. But they can be bad in times of stable economic growth and low interest rates.
Series EE bonds are a type of zero-coupon bond. You won't receive interest income for them. Instead, the bonds are issued at deep discounts to face value. They then compound to the point that they are worth the face value of the bond on the maturity date.
This is guaranteed by the Treasury. If an EE Bond does not double in value by the 20-year maturity date, the Treasury will make a one-time adjustment to make up the difference. This guarantee is one of the main differences between the Series EE bond and the Series I. Series I bonds don't have this guarantee. They come with a fixed rate of return for the life of the bond. They also have a semi-annual rate that adjusts for inflation.
What Are Series EE Maturity Dates?
The unique thing about Series EE savings bonds is that the maturity date for the paper bonds varies. When they mature depends on when the bond was issued.
| Bond Issue Date Range: Original Term | |
|---|---|
| Issue Date | Matures After... |
| January 1980-October 1980 | 11 years |
| November 1980-April 1982 | 9 years |
| May 1982-October 1982 | 8 years |
| November 1982-October 1986 | 10 years |
| November 1986-February 1993 | 12 years |
| March 1993-April 1995 | 18 years |
| May 1995-April 1997 | 17 years |
| May 1997-April 2005 | 30 years |
| May 2005-Present | 30 years |
In other words, if you bought a Series EE savings bond in January of 1983, it would have matured 10 years later. If you paid $2,500 for it, it would be worth $5,000 in January of 1993. You would never actually receive any money in the mail. Instead, each year the value of the interest you were owed would be added to your bond. This is how it increases in value.
You have the option to keep holding the bond for up to 20 more years. This means that it could be worth far more than the face value.
Note
All Series EE bonds reach final maturity 30 years from their issue.
Are There Penalties for Cashing Out Early?
If you sell your Series EE savings bond back to the government within five years of holding it, you lose the interest income you were owed for the most recent three months. If you redeem the bonds anytime after five years, there is no penalty. You receive the full value of the interest you are owed on the bonds.
Who Can Invest in Series EE Bonds?
According to the Treasury, there are a few requirements for Series EE savings bonds. Individuals, including children under 18, must have their own Social Security Number (SSN) and meet any one of the following conditions:
- United States citizen, whether they live in the U.S. or abroad
- United States resident
- Civilian employee of the United States, no matter where they live
Trusts, estates, corporations, partnerships, or other entities must have either a Social Security Number or Employer Identification Number (EIN).
Series EE bonds are owned by whomever they are registered to (either a person or entity). Registration should reflect the name of the owner, the Social Security Number or Employer Identification Number of the owner, and, if applicable, their second-named owner or beneficiary.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
TreasuryDirect. "Timeline of U.S. Savings Bonds."
New York State. "Certain Basics of Municipal Bonds."
TreasuryDirect. "Series EE Savings Bonds."
Federal Register. "United States Savings Bonds, Series EE, HH and I."
TreasuryDirect. "Convert Your Paper Savings Bonds Using SmartExchange."
Securities and Exchange Commission. "Zero Coupon Bonds."
TreasuryDirect. "May 2005 and Later (EE Bond Rates and Terms)."
TreasuryDirect. "Comparing Series EE and Series I Savings Bonds."
Department of the Treasury. "Interest Accrual Dates for Series E, Series EE, and Series I United States Savings Bonds, and Savings Notes," Pages 1-2.
TreasuryDirect. "Cashing (Redeeming) EE and E Savings Bonds."
TreasuryDirect. "Buying Series EE Savings Bonds."
I am an expert and enthusiast-based assistant. I have access to a wide range of information and can provide assistance on various topics. I can help answer questions, provide information, and engage in detailed discussions.
Regarding the concepts mentioned in the article you provided, let's discuss each one in detail:
Savings Bonds
Savings bonds have been a popular investment in the United States since 1935. They are issued by the Department of the Treasury to help raise money to fund the government. Savings bonds allow investors to buy bonds in small denominations, which is much lower than traditional corporate or municipal bonds that require larger amounts, such as $10,000 or $100,000 per bond.
Series EE Savings Bonds
Series EE savings bonds are a type of savings bond issued by the Department of the Treasury. They are known for allowing investors to buy bonds in much smaller denominations compared to traditional corporate or municipal bonds. There are two types of Series EE savings bonds: paper bonds and electronic bonds.
Electronic Series EE Savings Bonds
Electronic Series EE savings bonds are sold at face value. Investors can purchase electronic bonds in amounts of $25 or more, to the penny. The maximum purchase limit for electronic bonds is $10,000 per calendar year. Electronic bonds are issued to a designated account, and investors do not receive a physical paper bond when they buy them.
Physical Paper Certificate Series EE Savings Bonds
As of January 1, 2012, paper Series EE savings bonds are no longer sold. Previously, they were sold at half of the face value. Paper bonds were purchased in various denominations, ranging from $50 to $10,000. If you own paper bonds, you have the option to convert them to electronic bonds.
How to Make Money With Series EE Savings Bonds
When you buy a Series EE savings bond, you are lending money to the U.S. government. The rules for savings bonds can change over time, and the way they work depends on when you bought them. Series EE bonds bought on or after May 1, 2005, are fixed-rate bonds, while those bought during the eight years prior had variable interest rates. Series EE bonds are zero-coupon bonds, meaning you won't receive interest income for them. Instead, they are issued at a deep discount to face value and compound over time. The Treasury guarantees that if an EE bond does not double in value by the 20-year maturity date, they will make a one-time adjustment to make up the difference.
Series EE Maturity Dates
The maturity date for Series EE savings bonds varies depending on when the bond was issued. The table below shows the original term and the number of years it takes for the bond to mature based on the issue date:
- January 1980 - October 1980: 11 years
- November 1980 - April 1982: 9 years
- May 1982 - October 1982: 8 years
- November 1982 - October 1986: 10 years
- November 1986 - February 1993: 12 years
- March 1993 - April 1995: 18 years
- May 1995 - April 1997: 17 years
- May 1997 - April 2005: 30 years
- May 2005 - Present: 30 years
Penalties for Cashing Out Early
If you sell your Series EE savings bond back to the government within five years of holding it, you lose the interest income you were owed for the most recent three months. However, if you redeem the bonds anytime after five years, there is no penalty, and you receive the full value of the interest you are owed on the bonds.
Eligibility to Invest in Series EE Bonds
According to the Treasury, individuals, including children under 18, must have their own Social Security Number (SSN) and meet certain conditions to invest in Series EE savings bonds. These conditions include being a United States citizen, a United States resident, or a civilian employee of the United States. Trusts, estates, corporations, partnerships, or other entities must have either a Social Security Number or Employer Identification Number (EIN).
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