How does series ee bonds work

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Learn about our editorial policies. Reviewed by Anthony Battle. Learn about our Financial Review Board. Key Takeaways Series EE savings bonds allow investors to buy bonds in much smaller denominations than traditional corporate or municipal bonds.

There are both electronic EE savings bonds or paper Series EE savings bonds, which work slightly differently. The maturity date for Series EE paper bonds varies depending upon when the bond was issued. If you sell your Series EE savings bonds back to the government within five years, you lose the interest income you were owed for the most recent three months. She helps other learn about personal finance and investing at barbarafriedbergpersonalfinance.

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Understanding EE Bonds EE bonds pay a fixed rate of interest over their year term, making them very easy to understand.

Both must be owned for 12 months before they may be redeemed. If you cash them out during the first five years, you forfeit three months of interest payments. Series EE bonds and I bonds are both exempt from state and municipal taxes and may be completely tax exempt if used to pay for eligible higher education expenses. EE bonds offer a guaranteed return that doubles your investment if held for 20 years. I bonds lack such a promise of returns, though you are guaranteed not to lose your principal.

Was this article helpful? Share your feedback. Send feedback to the editorial team. Rate this Article. Thank You for your feedback! Series I U. Savings Bonds are inflation-indexed.

Series I Bonds offer a fixed rate of interest, adjusted for inflation. In paper form, these bonds were only available in specific denominations.

For more on the switch to all-electronic savings bonds and on how to open a TreasuryDirect account, please visit this page at TreasuryDirect.

You can use the Savings Bond Calculator and compare the different types of securities issued by the Treasury. Test your knowledge on common investing terms and strategies and current investing topics.

Department of Treasury. Both earn interest over time, up to their date of maturity — 30 years. Savings bonds have been around since , as a result of legislation passed by President Franklin D. Bonds were created to help Americans save money and to give the government funds to support efforts such as World War II. When you buy a U. The types of savings bonds available for purchase have changed over the years. For example, Series HH savings bonds are no longer sold.

Series EE savings bonds earn a fixed rate of interest each month for up to 30 years. The rate for new bonds is announced by the Treasury each year on May 1 and November 1.