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- How do I Calculate Interest on EE Savings Bonds?
- The Relation Between Stock & Bonds When the Interest Rate Declines
The way the U.S. Treasury reports interest earnings on Series EE savings bonds is different than the reported returns from most interest-bearing investments. All Series EE bonds issued since May 2005 earn a fixed rate of interest for the life of the bond. These newer bonds always have the same rate and yield. For bonds issued at an earlier date, the rate and yield will differ.
Series EE Rate vs. Yield
When the Treasury lists the yield of a specific Series EE savings bond, the interest quoted is the annualized earnings yield. Historic yield will be the average annual interest rate the bond has earned from issue to the present. The rate for an EE bond is the current interest rate the bond is earning the period. The Treasury adjusts the rates for savings bonds twice a year -- on May 1 and November 1. As a result, the historic yield of a savings bond may be significantly different from the current rate being earned. For example, a 10-year-old Series EE bond at the time of publication had a historic yield of 2.91 percent, but a current rate of 0.81 percent.
Savings Bond Rate Information
The U.S. Department of the Treasury provides savings bond information through the website at TreasuryDirect.gov. For Series EE bonds, the website provides historical rate information and several resources to find the current rates, yields, and values of EE bonds. Under the Tools tab of the website, you have access to an online Savings Bond Calculator, the Savings Bond Wizard software, and Savings Bond Earnings Reports documents. The Treasury stopped publishing the Earnings Reports at the end of 2011, but older reports are still available for download on the website.
The different resources provided by the Treasury use different terms to discuss the interest rates earned on Series EE bonds. The Savings Bond Wizard has yield and rate columns in the inventory section of the software's main screen. The columns provide the historic yield and current rate for the listed savings bonds. Earnings reports have a column titled "Current Earnings" for current rates, and "Earnings from Issue" to show the annual yield a bond has earned since it was issued.
Historical EE Bond Rates
The U.S. Treasury has revised how Series EE bond rates are determined and credited several times since the first EE bond was issued in 1982. Series EE bonds issued before May 2005 have the rate adjusted twice a year -- according to the interest rate policy in effect when the bond was issued. When a new rate goes into effect, both the yield and rate will adjust to reflect the new rate being earned for the half-year period. The Treasury does not publish the earnings effect of the semi-annual compounding of EE bond interest.
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