2. WHAT ARE THE DIFFERENT TYPES OF SAVINGS BONDS?
There are two different types of US Savings Bonds available at this time. They are Series EE and Series I. There isn't a whole lot of difference between the two types, but the most commonly purchased is the Series EE.
Series EE
1. Fixed rate of return. Currently 3.6 % through April 2007
2. Government backed. No matter what happens with the market, the value of your Series EE US Savings Bond will continue to gain interest until it hits final maturity.
3. Can be purchased in many denominations. $50, $75, $100, $200, $500, $1,000, $5,000 and $10,000 for paper bonds. Electronic bonds can be purchased for any amount over $25
4. Paper bonds are purchased at 50% of face value or $50 for a $100 bond while electronic bonds are purchased for face value only. Another reason more people choose the Series EE US Savings bonds. If you purchase your savings bond through a bank you double your money when the savings bond reaches original maturity.
5. Can be used for education, retirement or given as gifts
Series I
1. Rate of return higher and fixed. Series I bonds have a fixed rate of return plus an inflation rate that changes in May and November of each year. Currently 4.52%.
2. Can be purchased in many denominations. $50, $75, $100, $200, $500, $1,000, $5,000 and $10,000 for paper bonds. Electronic bonds can be purchased for any amount over $25
3. Both paper and electronic bonds are purchased for face value. Some people consider this a downfall for the Series I US Savings Bonds, but if you figure in the higher interest rate over time, Series I could bring greater rewards.
4. Can be used for education, retirement or given as gifts
The main reason for the popularity of the Series EE savings bond is the government backed guarantee. While the Series I has a higher rate of return, they do not carry the same guarantee so people tend to shy away from these savings bonds.
3. SAVINGS BOND MATURITY
When you invest in savings bonds you are planning for the future. Savings bonds take a set amount of time to reach face value. When the savings bond reaches face value it is said to have reached Original Maturity. Depending on the Series bond you purchased and when you purchased it will tell you when the bond matures.
Series EE and Series I Original Maturity
1. Jan 1980-Oct 1980 11 years
2. Nov 1980-Apr 1981 9 years
3. May 1981-Oct 1982 8 years
4. Nov 1982-Oct 1986 10 years
5. Nov 1986-Feb 1993 12 years
6. Mar 1993-Apr 1995 18 years
7. May 1995-present 17 years
The maturity times above are current but not guaranteed. The higher or lower the market rate, the faster or slower the savings bond will mature. At no time will it take more than twenty years for a savings bond to reach face value.
Final maturity
Both Series EE and Series I savings bonds will continue to gain in value after they have reached original value. The value gain stops at 30 years for both series. When the savings bond has reached its maximum value at 30 years it is said to have reached Final Maturity.
