Savings Bonds Mature

Savings bonds include series EE and I bonds. There were HH bonds, but they are no longer issued. If you hold an HH bond, you can get your purchase price back through direct deposit. The EE bonds and I bonds mature in 20 years. You can cash the EE and I series bonds in after 1 year, but you will have to pay a penalty. After 5 years of purchase, you can cash in the bonds without a penalty. The penalty you pay, if you cash in the bonds before the 5 year limit, is the last 3 months of interest that your bond earned. Both EE and I bonds continue to earn interest for another 10 years after the 20 year maturity date.

The Series EE bonds are exempt from local and state income taxes, but you must declare the interest on your federal income taxes. Though interest accrues each month on bonds, no interest is paid until the bonds are redeemed. EE bonds don't work quite the same way that I bonds work. There is no inflation protection, as there is with I Bonds. EE bonds have a fixed rate; the rate at which you buy the bond is the rate you will keep. Every 6 months the interest rate changes, but whatever the interest rate is at the time of the purchase is the rate you will keep. The interest rate for EE bonds is based on the 10-year average for Treasury securities.

You purchase I Bonds at their face value and the interest starts accruing from the first day of the month of your purchase. You can buy paper I Bonds in the amounts of $50, $75, $100, $200, $500, $1,000, and $5,000; electronically you can purchase an I bond for as low as $25. When purchasing I Bonds, it is a good idea to purchase them later in the month, because you get credit for the whole month. However, when you go to redeem your bonds, you will not get paid interest for the month you redeem them.

Paper Series EE Bonds can be purchased in the amounts of $50, $75, $100, $200, $500, $1000, $5,000, and $10,000. You can also buy electronic Series EE bonds for as low as $25 through Treasury Direct. If you purchase electronic bonds, you pay for the face value of the bond, whereby, if you purchase paper Series EE bonds you would pay only half the face value. Both Series EE and Series I bonds have their own rules and their own formulas for paying interest on your bonds. Both bonds mature in 20 years and have a final maturity date is in 30 years.