Thirty years ago I bought a few series EE Bonds. They’ve matured! Hooray, I can go to a restaurant a few times. (Barely.)
Before venturing to the bank to cash them I used the On Line Savings Bond Calculator tool to see what they were worth. The tool allows you to put in the purchase date and face value and spits out the maturity information, rate of return and value.
In February of this year, my 30 year $100 bond with an interest rate of 4.00% reached final maturity at $207.36 with $157.36 interest.
In March of this year, my 30 year $100 bond with an interest rate of 4.00% reached final maturity at $164.12 with $114.12 interest.
Each bond was purchased for $50, with a face value of $100. Both were held for 30 years and had the same interest rate of 4.00%. They were purchased one month apart. Can anyone tell me how come there is such a substantial difference in what they accumulated in interest?
ETA: It wasn’t a glitch in the calculator tool, these are the actual amounts that the bank paid me for the bonds.
They were purchased at separate dates so they are fundamentally different things, the interest got recalculated every 6 months, and you were not earning 4.00% constantly throughout the life.
I think you might be confused because you’re looking at the current policy. They changed the rules in 2005, see this: May 2005 and later — TreasuryDirect
They pay a coupon semiannually, and EE bonds pay compounded interest at maturity. So the total return with a 4% coupon over 30 years is (1.02)^60 ignoring small corrections for exact daycount. That’s exactly what you got paid for the second bond. The implied coupon for the first bond was 4.8%.
I don’t know exactly how EE bonds have worked historically, but I assume that the terms changed and you misremembered. In any case, you got more than you should have expected at 4%.
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