Series EE savings bonds

I have some series EE savings bonds dating from 1986-1996, and I’m trying to figure out when to cash them. I plugged the serial numbers into the savings bond calculator and got a handy dandy print out of the current value, the final maturity date, and the interest rate. Here’s what I find confusing:

Full article.

What?! This is complete gibberish to me. I’m trying to make a smart decision about this, but I don’t have a financial backround, and cannot decipher this.

My question going into this nightmare of confusing, convoluted, and increasingly desperate googling was this: How much interest are these bonds going to earn until their final maturity date and am I better off cashing them now and putting them into a savings account? Is this a question for an accountant, or can most people figure this stuff out for themselves? Why on earth isn’t there a basic financial class in high school so that folks aren’t floundering to maximize what little money they have?

This is not a fixed rate, so you can’t be sure how much they will earn in the future, unless you have a very good crystal ball. I think the rate changes every month. Recent percentages have been loosely between 2 and 4%. I haven’t seen a savings account in that time frame that has given more, but I haven’t been searching too hard, either.

I think the rates were higher back in '83, but you’re talking about the future, so that doesn’t matter. Both savings account rates and savings bond rates go up and down. The account rate will probably not shift as often as the bond rate. So if rates rise, the bond rate will rise sooner and you’ll get more benefit. If rates fall, you’ll get more detriment.

Look at the Bond Wizard. It should show you what kind of rate you’ve been getting. Check bank account rates. Check again in a month or so. See which is higher. Then ask yourself which you’re more likely to spend for non-emergency reasons. That’s the reason I’m on the payroll bond plan. It’s psychologically harder for me to cash in the bonds, so the money stays there, earning interest.

– just noticed–

You said calculator, not Wizard. Let me look for that.

It used to be that any EE savings bond that hadn’t reached par or “face” value after 17 years, Treasury would make a one-time adjustment.

With all that, EE savings bonds are a pretty lousy place to store money for 17 years or longer. I happen to like the I series bonds, which at least make some pretension about keeping up with inflation - I bonds are a decent place to park money now and then when rates are favorable - very competitive with CDs and Money Market funds.

Thank you, Yllaria. I was thinking about putting them into a long term savings account, as part of the 6-8 months of savings that you’re “supposed” to have available for emergency purposes. I’ve been trying to figure out CDs and such, but it’s all pretty confusing.

Common Tater, if I wanted to buy some bonds for a newborn, would I be better off with I bonds, or are EE more stable but lower earners?

I second this as well–I take an automatic payroll deduction to buy myself an I Bond every month. Besides the adjustment for inflation, the other thing I like about I Bonds is that they’re pretty liquid. They earn interest immediately (you pay face value for them), and are liquid after five months or so.

EE Bonds, IIRC, were not so liquid. If you have a financial need, you couldn’t cash them in easily.

Tripler
IIRC, of course. YMMV.

5.25% seems to be very common for online savings accounts. I am getting that with etrade bank.

My recollection is that both EE and I bonds can be cashed in after 6 months, which makes them pretty liquid at that time. Let me RTFWS…

From http://www.treasurydirect.gov/indiv/products/prod_eebonds_glance.htm: EE bonds can be cashed in after 1 year, but there’s a penalty if they’re cashed in before 5 years.

And I bonds at http://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm have the same terms.

Both pages also report that interest accumulates monthly. I had thought that interest accumulated every 6 months, so apparantly they changed it.

Ok, now I have a Savings Bond question… I want to buy a new car, so would it be a smart financial decision to cash my saving bonds for the down payment on the car, I would think it would be since the interest rate on the loan will probably be higher than what I’m earning on the bond. Right? Most of them are EE, I have one E from 1979 and it will stop earning interest in a couple years so I figure I may as well cash it now. But what about the newer EE’s that I have from the 80’s and early 90’s, some of them haven’t even reached face value yet. Should I hold on to them? Would it make more sense to hold on to them and cash them if I decide to buy a house in a few years rather than now? And, yes, I realize buying a new car isn’t really a good investment, but I’m going to buy one anyway.

Oh, and what’s the tax hit going to be when I cash them? Is there a way to avoid or minimize it? The only wany I can think of is to use it for college since tuition is a deductable, but I’m done paying for school.

Sorry to take so long. (And sorry if one of the posts above includes this.)

Savings Bond Wizard
Download the wizard into your computer. Plug in your savings bonds. It’ll show you what king of interest they’ve been getting. It will also let you make a catalog, so in case you loose bonds, you know the numbers. I like my Wizard catalog.

I think CD’s have better interest than savings accounts, but you have to shop for good numbers. Also, the larger the investment and the longer they are required to stay untouched, the higher the interest. There is substantial penalty for early withdrawal. Savings accounts are more liquid.

biometricks - I think there’s some plan for rolling EE bonds into another kind of bond with no tax for the interest. So if you want to keep saving, you could check that out. Also, you can shop for your car loan before you shop for your car. That will let you compare the interest on the loan vs different savings vehicles.

My last car loan was a little more than 4%, which surprised me. But if the % is higher, cashing in the bonds could make sense. Be sure to calculate in the tax bite first, though.

Thanks for the info Yllaria– I guess you meant the HH bonds. I looked it up and it appears they stopped issuing them a few years ago.
(source: http://www.bankrate.com/brm/news/DrDon/20070619_savings_bond_EE_a1.asp )

Bah, I will have to find another way to avoid you, Tax Man!