The time it takes a savings bond to reach face (par) value depends on the series of bond and the value at which it was sold. There are presently three different series of U.S. savings bonds. Series EE and Series I are intended to be savings bonds, and Series HH is intended to be an investment bond.
In general, though, a savings bond is sold as a zero-coupon bond at a discount, and will reach its full value at its maturity. Therefore, savings bonds mature to their full face value.
Key Takeaways
- Savings bonds are sold by governments to their citizens to help fund federal spending, and provide savers with a risk-free return.
- Savings bonds are sold at a discount and do not pay regular interest. Instead, as they mature, they increase in value until they reach full face value at maturity.
- The time to maturity for savings bonds will depend on which series issue is owned.
When Do Savings Bonds Mature?
U.S. Savings Bonds mature after 20 or 30 years, depending on the type of bond:
- Series EE bonds mature after 20 years. They are sold at half their face value and are worth their full value at maturity.
- Series I bonds are sold at face value and mature after 30 years. Interest is added monthly to the bond's value.
- Series HH bonds mature in 20 years. Bondholders receive monthly interest payments until they sell the bond or it reaches its maturity.
A Brief History of U.S. Savings Bonds
In 1935, during theGreat Depression, President Franklin D. Roosevelt signed legislation that allowed theU.S. Department of the Treasuryto issue federally backed savings bonds, Series A. In 1941, the Series E bond was first issued to help finance World War IIand were called Defensive Bonds. After the attack on Pearl Harbor, they were called War Savings Bonds, and the money invested in them went directly towardthe war effort.
After the war ended, Americans were encouraged to purchase savings bonds, which provided a way for individuals and families to earn returns on their investments while enjoying the absolute guarantee of the United States government.
Series EE Bonds
Series EE bondsmature after 20 years, meaning they can earn interest for that period of time. EE bonds are sold for half of the face value, and the U.S. Treasury Department guarantees that they will reach face value after 20 years. If the interest payments don't cause the bond to reach full face value at the end of 20 years, the government will do a one-time adjustment to bring the bond's value to equal face value.
It's important to keep in mind, however, that EE bonds must be owned for at least one year before redemption. If they are redeemed before five years, the last three months' worth of interest is forfeited, but after five years, they can be redeemed with no penalty. The annual interest rate for EE bondsissued from Nov. 1, 2018, to April 30, 2019, is0.10%.
Series EE savings bonds originated as Series E war bonds during the WWII era to help fund the war effort.
Series I Bonds
Series I bondsare sold at face value and mature after 30 years. Redemption rules are the same with Series I bonds as Series EE bonds.The composite rate for Series I bonds issued fromNov.1, 2019, throughApril 30, 2020, is2.22%. This rate applies for the first six months that you own the bond.
Series HH Bonds
Series HH bondsare also sold at face value, with bondholders receiving interest payments through direct deposit every six months for the 20-year life of the bond. As of Jan. 2003, HH bonds have earned an interest rate of 1.5%. HH bonds have not been available for purchase since Aug. 2004, but bondholders will continue to receive interest payments until the bonds'maturity.
FAQs
A bond earning interest at an average rate of 5% per year, compounded semiannually, would reach face value no later than 14 1/2 years after issue while a bond earning interest at an average rate of 6% per year, compounded semiannually, would reach face value no later than 12 years after issue.
How long does it take for a savings bond to reach face value? ›
U.S. Savings Bonds mature after 20 or 30 years, depending on the type of bond: Series EE bonds mature after 20 years. They are sold at half their face value and are worth their full value at maturity. Series I bonds are sold at face value and mature after 30 years.
How long does it take to get money for savings bonds? ›
When you cash your bonds online, the cash generally transfers to your checking or savings account within two business days of the request.
How long does it take for a savings bond to appreciate? ›
Key takeaways
Series EE bonds issued today will mature in 20 years, and they are guaranteed to double in value over that time. You can let the bond continue to accumulate interest for an additional 10 years after maturity.
What is the face amount on a savings bond? ›
Face value is the amount of money promised to the bondholder upon the bond's maturity. By contrast, a bond's market value is how much someone will pay for the bond on the free market. Face value is predetermined when the bond is sold; market value takes into account multiple outside factors.
Do you get the face value of a bond? ›
Each bond comes with a set term that typically ranges from 1 to 10 years or more. The face value of each bond, also referred to as the par value or redemption value, is set by the issuer and typically printed on the bond itself. It represents the amount the issuer promises to pay once the bond reaches maturity.
Do bonds have face value? ›
Yes. Face value refers to the dollar value of a financial instrument when it is issued. The face value of a bond is the price that the issuer pays at the time of maturity, also referred to as “par value.” By comparison, the face value of a stock is the price set by the issuer when the stock is first issued.
How long does TreasuryDirect take to process? ›
Cashing a Series HH savings bond where you are named on the bond and you send it in requires at least 3 months of processing time. All other requests may require 6 months or more to process. The annual purchase limit for Series I savings bonds in TreasuryDirect is $10,000.
How long does it take for a $100 EE savings bond to mature? ›
Series EE bonds mature in 20 years but earn interest for up to 30 years. The U.S. Treasury guarantees Series EE bonds will double in value in 20 years.
Can I cash a savings bond at any bank? ›
You can cash paper bonds at a bank or through the U.S. Department of the Treasury's TreasuryDirect website. Not all banks offer the service, and many only provide it if you are an account holder, according to a NerdWallet analysis of the 20 largest U.S. banks.
How to get the most value from your savings bonds
| Face Value | Purchase Amount | 30-Year Value (Purchased May 1990) |
|---|
| $50 Bond | $100 | $207.36 |
| $100 Bond | $200 | $414.72 |
| $500 Bond | $400 | $1,036.80 |
| $1,000 Bond | $800 | $2,073.60 |
After 20 years, the Patriot Bond is guaranteed to be worth at least face value. So a $50 Patriot Bond, which was bought for $25, will be worth at least $50 after 20 years. It can continue to accrue interest for as many as 10 more years after that.
How much is a $50 savings bond worth? ›
| Total Price | Total Value | Total Interest |
|---|
| $50.00 | $69.94 | $19.94 |
The market price of a bond is influenced by investor demand, the timing of interest payments, the quality of the bond issuer, and any differences between the bond's current yield and other returns in the market.
Why is my EE bond worth less than face value? ›
Paper Series EE bonds were sold at half their face value. For example, if you own a $50 bond, you paid $25 for it. The bond isn't worth its face value until it matures.
Why did my savings bond lose value? ›
If a bond is held past its maturity, the federal government remains responsible for the debt. However, savings bonds that are held past their maturity date do not continue to earn interest and may actually lose value due to inflation.
How long does it take for a $50 savings bond to mature? ›
Key points. Series EE bonds mature in 20 years but earn interest for up to 30 years. The U.S. Treasury guarantees Series EE bonds will double in value in 20 years. You don't receive the interest on your Series EE bond until you cash it.
How much is an EE bond worth after 20 years? ›
EE bonds you buy now have a fixed interest rate that you know when you buy the bond. That rate remains the same for at least the first 20 years. It may change after that for the last 10 of its 30 years. We guarantee that the value of your new EE bond at 20 years will be double what you paid for it.
