Series Ee Savings Bonds Interest

Series EE Savings Bonds are Patriot Bonds. You can get the Series EE Patriot Bond from your local bank, from a broker or from Treasury Direct. Thanks to congress, this type of war bond came back into existence again after the September 11 attacks. The Series EE Bond is re-priced every 6 months, similarly to the Series I Bond, except there is no inflation protection, as there is in the I Bond. The Series EE Bond used to accrue interest at a variable interest rate, but since 2005 it now accrues interest at a fixed rate. Whatever the interest rate is when you buy the bond is the rate of interest the bond will have until its final maturity.

Compounding interest accrues on the Series EE Savings Bonds and increases the bond's value. The interest is subject to be taxed by the federal government, but state and local taxes don't apply to this bond, because it is issued by the U.S. government. Series EE Savings Bonds tend to stay ahead of inflation by approximately 2 percent, but there is no guarantee that the bond will remain that way, because there is no inflation protection.

Few people understand how the Series EE Savings Bonds actually accrue interest, because the U. S. Treasury has changed the rules quite regularly. The Interest rates for the Series EE Savings Bonds have been at a fixed rate since May of 2005. The fixed interest rates apply for 6 months, and then the rate can be changed to another fixed rate to stay up with the economy. Series EE Savings Bonds and other types of savings bonds, all have 30 years in which to earn interest. Since there are 30 years to earn interest, there are 60 rating periods in those 30 years.

Interest on the new Series EE Savings Bonds issued since May of 2005 work differently than older bonds. For the first 20 years of the newer bonds have the same interest rate for the first maturity at 20 years, which means that for 40 rating periods the interest rate will be the same. After the 20th year the U. S. Treasury can change the interest rate for the final 10 years (20 rating periods) of the bond's life. The Treasury announces the new interest rates in May and November; the new rates don't apply until the next rating period. Older bonds issued before May of 2005 are subject to the old system; these bonds are subject to variable interest rates every rating period. If you are young and planning for your retirement, Series EE Savings Bonds are a good long term investment.