Content

• Steps
• Tips
• Warnings

Many young people receive EE series savings bonds as gifts to help save up for college, weddings, and other upcoming expenses. This is very beneficial for donors as they are only worth half of their face value on paper. The bonds are valid for up to 30 years, but they can be cashed at almost any time in life.

Steps

1. 1 Find out about the different interest rates on EE savings bonds. Knowing the savings bond rate can help you decide if it makes financial sense to try to cash in on your bonds. Depending on the year of issue, EE savings bonds carry different interest rates.
   • Bonds purchased prior to May 1997 earned different interest rates depending on when they were purchased.
   • Bonds purchased between May 1997 and April 2005 earned at a variable interest rate, that is, on their change in interest rates. They changed every six months, and that's 90% of the Treasury's five-year average income over the previous six months.
   • Bonds purchased between May 2005 and the end of 2006 earn between 3.2 percent and 3.7 percent, and will continue to do so for as long as you have them.
2. 2 Be aware that you will not be able to sell an ITS savings bond a year after you purchased it. Whether you bought the bond yourself or received it as a gift, you will not be able to redeem it for a year after purchase.
3. 3 If you decide to buy back EE savings bonds before 5 years have passed, be aware that some sanctions will apply. EE savings bonds must be a long-term investment. If the bonds are cashed before the expiration of the five-year period, interest payments for the last three months will be confiscated.
4. 4 Wait at least 20 years, that's best. EE savings bonds double in value in the 20-year milestone. If you want the best return on your money, wait until the 20-year maturity has passed.
   • Let's say you have a bond worth $ 100 with an interest rate of 0.20%. After 20 years, the bond reaches a maturity value of $ 200, although the nominal value of the loan, given the interest rate, will usually be $ 105. After adjusting for 30 years, it will earn a fixed interest rate.
   • Regardless of the interest rate of your current EE Savings Bond, twenty years before cashing out, you are guaranteed an effective return in the region of 3.5 percent.
5. 5 Cash any savings bonds that are over 30 years old. Such savings bonds receive interest only for 30 years; if you happen to have a bond that is over 30 years old, there is no point in investing it, so cash it out.
6. 6 Electronic bonds and paper bonds should be cashed in different ways. Electronic bonds can be redeemed online and money is credited directly to a checking account within 1 or 2 days. Paper bonds can be redeemed at participating banks. Check with your local bank if your EE savings bonds can be redeemed.
   • Please note that redemption policies for bonds less than or greater than $ 1,000 per person may differ. Paper bonds over $ 1,000 may require a certified employee to work with you when you cash out.
7. 7 Expect to pay taxes on EE savings bonds. You can take advantage of the tax deferral until you cash out or pay taxes when the bond matures - right at the start. If you don't want to postpone paying taxes, you can pay them at the end of the year.
   • If you want to include taxes on your student loan, it’s best to defer taxes until you cash out the bond.

Tips

• If you just want to know the current amount of a bond, you can use the US Government Treasury website. You can also check what amount will be in the future; by simply changing the "cost to" field.
• If you have multiple bonds, you can download a tracking wizard from the same site that can tell you other statistics about your individual bonds.
• Keep in mind that you will not get the best value for the bond if you cash it out before the full maturity date, which is exactly 30 years after the issue date. However, it may be in your best interest to transfer money to savings accounts or deposits with higher rates, if available.

Warnings

• New bonds have a waiting period of 3 to 5 years before being withdrawn. There are penalties for early cashing: interest rates for 3 months may not be paid.
• If your calculator reads that your bonds are actually worth less than par, don't be alarmed. The maturity for bonds can be from 7 or 8 to 20 years, depending on the year of issue.
• You may need to report interest income to the IRS. Discuss this with your tax officer to see if this applies to you.