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Since World War II, the U.S. Department of the Treasury has offered Series EE bonds as a way for Americans to save money without incurring high risk on their principal, while also benefiting from compound interest.
For Series EE savings bonds, interest accrues monthly and compounds biannually, ultimately providing a tidy sum by the date of maturity.
EE bonds are directly backed by the full faith and credit of the federal government, making these bonds very low risk since the U.S. has never defaulted on its debts. The Treasury bases the interest these bonds accrue on a percentage of long-term Treasury rates. Regardless of the rates, the federal government guarantees that EE bonds will double in value within the first 20 years.
EE bonds are among the few direct-issue government bonds still available, along with Treasury marketable securities and Series I bonds. Series EE bonds are one of the two last types of non-publicly traded bonds (I bonds being the other) still actively marketed by the U.S. government. Though a bit old-fashioned, they remain an excellent way to invest or begin saving for college, a house or other large purchases down the road.
Table of contents
- What are the maturity dates for Series EE bonds?
- What is the waiting period for cashing in Series EE bonds?
- What factors influence the maturity period of Series EE bonds?
- How does EE bond interest accrue and compound?
- Series EE bond Maturity FAQs
What are the maturity dates for Series EE bonds?
Current Series EE bonds mature after 30 years, but they are guaranteed to double in value in the first 20 years during which time the interest rate is fixed. For example, if you invested $5,000 into Series EE bonds today, you are guaranteed to have at least $10,000 in 20 years.
You can hold EE bonds for up to another 10 years, during which time they’ll accrue additional interest before fully maturing. However, your money isn’t guaranteed to double again. EE bonds will stop accruing interest after 30 years at the date of maturity.
How long it takes for Series EE bonds to double in value entirely depends upon when the bonds were purchased. Currently, EE bonds reach full maturity after 30 years, but are guaranteed to double in value in the first 20 years.
However, maturity dates for EE bonds used to be less than 30 years. In the 1980s, when interest rates were high, maturity dates were as short as eight years. From March 1993 to April 1995, maturity dates were 18 years. If interest rates continue to rise, we may see the Treasury Department shorten maturity dates for EE bonds.
Time will tell whether interest rates for EE bonds will climb or fall, but what’s important is that no matter what happens with rates, the value of your bond is guaranteed to at least double within 20 years. If you have held a bond for 20 years but interest rates weren’t enough to double your money, the government will calculate additional interest when you redeem them. This is good news for the value of your EE bond if you purchased it during the zero-interest rate period of the 2010s.
The following table provides a historical breakdown of how Series EE bonds matured from the 1980s and beyond:
|Dates of Issuance
|Time to Maturity
|November 1980–April 1981
|May 1981–October 1982
|November 1982–October 1986
|November 1986–February 1993
|March 1993–April 1995
|May 1997–May 2003
|June 2003–April 2005
|May 2005 and after
What is the waiting period for cashing in Series EE bonds?
You can't cash in your Series EE bonds within the first year of purchase. If you cash in your EE bonds at any time within the next four years after issuance, you will not receive the final three months of interest as an early-withdrawal penalty.
The waiting period for redeemed Series EE bonds depends upon the prevailing interest rate environment and the bonds’ maturity date. If you purchased $10,000 of EE bonds at a time when interest rates were near zero, you'll probably have to wait 20 years for your bonds to double in value.
On the other hand, if you purchased the same amount of bonds when interest rates were high, you can probably expect to double your old savings bonds' value in less than 20 years. Just be mindful that if you don’t hold them for five years after your purchase, you will sacrifice the last three months of interest as an early-withdrawal penalty.
The maximum waiting period for EE bonds purchased after May 2005 is 20 years to double in value and 30 years until they reach maturity.
What factors influence the maturity period of Series EE savings bonds?
As you might expect, the prevailing interest rate environment is the most significant factor determining when Series EE bonds are able to mature. However, in this context, these bonds “mature” when they’ve grown to twice the initial purchase amount. After that point, you have the option of redeeming them or holding them until full maturity after 30 years.
- When interest rates are high, EE bonds will increase in value more quickly and double in value by an earlier date.
- When interest rates are low, EE bonds will take longer to double in value.
You can use the Rule of 72, which is based on compound interest, to get an idea of how long it will take for your bonds to double in value. This rule divides the number 72 by the interest rate you’re earning. The quotient is the number of years it will take for your money to double.
Using the Rule of 72, bonds that yield 9% per year will double in value approximately every eight years. If the prevailing interest rate environment only pays 6%, your bonds will double in about 12 years. Series EE bonds issued after May 2005 pay the interest rate at which they were set at the time of issuance for the first 20 years. After that time, the interest rate may be adjusted to reflect the current environment.
You must also factor taxes into this equation, which can whittle away up to one-third of your growth depending on your tax bracket. You can either pay taxes on your interest as it accrues every year, or you can pay it all in the tax year when you redeem the bonds. Series EE bonds are taxable at the federal level, but not at the state or local level. You will pay ordinary income taxes on the interest you earn.
How does an EE bond accrue and compound interest?
EE bonds accrue interest monthly. However, interest is compounded every six months. This has been the method the U.S. Treasury has used to calculate bond interest since May 2005. If you purchased paper bonds before then, use the TreasuryDirect website’s savings bond calculator to calculate how much interest you've earned.
Rates for Series EE savings bonds are set each year on May 1 and Nov. 1. The interest that you earn is compounded semiannually. If you redeem your EE bonds within the first five years after purchase, you will forfeit the last three months' interest. You cannot cash in your bonds for one year after purchasing them.
- If you buy EE bonds in January, you will begin accruing interest in January, which will compound twice a year in January and July.
- If you buy EE bonds in late January, you may not receive your first interest payment until July.
- If you buy EE bonds in February, you'll receive interest in February and August.
As you continue with your financial planning, you may want to consider other investment alternatives that can offer higher returns like:
- Mutual funds
- Real estate investment trusts (REITs)
- Exchange-traded funds (ETFs)
Over time, those asset classes can produce much higher returns than Series EE bonds. Additionally, you’re limited to purchasing $10,000 worth of EE bonds each year.
Doubling your money over the long term may sound enticing, but not when you compare that to the potential returns of other asset classes. You can also choose types of short-term investments as well, like the best high-yield savings accounts.
Series EE bonds maturity example
The figures in the table above assume the interest rate will remain at 2.5% for 30 years.
You can use your income tax refund to buy bonds each year. Most tax preparation services will allow you to do this automatically as one of the refund options. But remember that you’re limited to $10,000 of EE bonds in any calendar year.