How Long Does it Take for Series EE Savings Bonds to Reach Face Value?

by Mark Kennan

    The United States Treasury Department used to sell Series EE bonds at half the face value with the promise that the bond would eventually reach face value. As of 2013, the Treasury now sells the bond at face value and the bond earns interest over time so you get more than the face value back when you cash it in.

    You're allowed to cash in your EE savings bonds as shortly as 12 months after buying the bond; however, if you cash in your bond before you've owned it for at least five years, you lose the last three months of interest as an early withdrawal penalty. Since EE bonds are now sold at face value, if you were to cash it in after just one year, you would receive the face value plus nine months of interest.

    The Treasury guarantees that your savings bond will double in value in no more than 20 years. For example, if you buy an EE bond with a $100 face value on Jan. 1, 2013, it will be worth at least $200 on Jan. 1, 2033. If the normal interest hasn't made it double in value at that point, the Treasury makes a one-time payment to up the bond's value to twice the face value. Depending on interest rates, however, the bond could double in value in less than 20 years.

    Series EE savings bond don't stop earning interest as soon as they double their face value. Rather, they have a final maturity of 30 years. This means that the bond will continue earning interest for 30 years after you bought it, regardless of whether it doubles in value after 20 years with a special Treasury payment or earlier. After 30 years you need to redeem the bond, because it won't keep earning interest.

    One of the added benefits of Series EE savings bonds is that you can defer paying taxes on the interest you earn until you cash out the bond, rather than paying the interest in the year you earn it. For example, say your savings bond earns $5 in the first year. If you don't redeem the bond until year 30, that's 29 more years that you've put off paying taxes on the interest. It might not sound like much, but if you have a plethora of bonds, the tax deferral option can save you some serious dough.

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    About the Author

    Mark Kennan is a freelance writer specializing in finance-related articles. He has worked as a sports editor for "Ring-Tum Phi" and published articles on a number of online outlets. Kennan holds a Bachelor of Arts in history and politics from Washington and Lee University.

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