According to data from the U.S. Department of the Treasury, at least $35 billion in matured U.S. savings bonds are unclaimed, suggesting a widespread lack of understanding about when they mature.12 For millions of Americans, savings bonds are a stalwart of conservative investing strategies. But many don’t know how long savings bonds take to reach their face (or par) value. While some bonds mature in as little as a year, others can take up to 30 years to fully mature.
The timing depends on the characteristics of the bond and the value at which it was sold. Generally, a savings bond is sold as a zero-coupon bond at a discount and will reach its full value at maturity. Therefore, savings bonds have to mature to reach their total face value. The U.S. Department of the Treasury sells two types of savings bonds: Series EE and Series I. Previously, there were also Series HH savings bonds, but they were discontinued in 2004.34
Below, we review the factors that influence a savings bond’s journey to face value, exploring how different bond series and interest rate structures determine when your investment will meet its target.
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.
- Series EE bonds mature after 20 years but can continue to pay interest for another 10 years. They are sold at half their face value and are worth their full value only at maturity.5
- Series I bonds are sold at face value and mature after 30 years.6
A Brief History of U.S. Savings Bonds
Since 1935, the U.S. Treasury has offered savings bonds as a straightforward way for Americans to invest and build financial security. The first bonds were called Series A. In 1941, the Series E bond was issued to help finance World War II. They were initially called “Defensive Bonds.” After the attack on Pearl Harbor, they were renamed “War Savings Bonds,” and the money invested in them went toward the war effort.4 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 guarantee of the U.S. government.
The Bureau of the Fiscal Service, a division within the Treasury, oversees these government-issued securities. Over the past nine decades, more than 6.8 billion paper savings bonds have been issued, totaling over $740 billion in value.
About 1% of all paper bonds ever issued remain unredeemed despite being at least three years past their maturity date. These bonds, known as matured unredeemed debt (MUD), represent an ongoing financial obligation for the government. These savings bonds never expire, and owners can redeem them anytime. Some bondholders deliberately hold onto matured bonds, while others may be unaware they have unredeemed bonds.
The Treasury has launched various initiatives to encourage redemption, but these efforts have faced challenges because of the program’s long history and different recordkeeping methods before its records were digitized.1eries EE Bonds
Series EE bonds earn interest for up to 30 years. EE bonds are sold for half of the face value, and the 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 make a one-time adjustment to bring the bond’s value in line with its face value.7
EE bonds must be owned for at least one year before redemption. Moreover, if they are redeemed before five years, the last three months’ worth of interest is forfeited.7
The interest rate on EE bonds issued from May 1, 2024, to Oct. 31, 2024, is 2.70%.7
Interest on EE and I savings bonds is earned monthly and compounded semiannually.8
Series I Bonds
Series I bonds are sold at face value and mature after 30 years. They have the same redemption rules as Series EE bonds—you can cash them in after one year but will pay a penalty if you exit the financial product within the first five years of ownership.6
Unlike the Series EE savings bond, I bonds earn interest through a combination of a fixed rate, which remains constant throughout the life of the bond, and a variable inflation rate that is adjusted twice a year based on changes in the U.S. consumer price index. The composite rate for Series I bonds issued from May 1, 2024, to Oct. 31, 2024, is 4.28%. This rate applies for the first six months that you own the bond.6
What Is Face Value?
Face value is a security’s nominal or dollar value as given by its issuer. For bonds, it’s the amount paid to the holder at maturity, which is when the bond issuer must repay the original loan.
How Do Savings Bonds Work?
With savings bonds, you lend money to the government, and in return it regularly pays you interest until the date you decide to ask for the money you lent back or the loan matures, which in the U.S. is 20 or 30 years. In the U.S. there are two types of savings bonds: EE bonds, which carry a fixed rate and are guaranteed to double in value if kept for 20 years or longer, and I bonds, which pay a variable rate and pay back the proceeds borrowed after 30 years, unless you cash out sooner.8
Do Savings Bonds Double Every 7 Years?
There is no set rule about savings bonds doubling after seven years. Series EE bonds are guaranteed to double in value after 20 years. Series I bonds don’t offer guarantees and may not double in value at any guaranteed point.
The Bottom Line
The time it takes for a savings bond to reach its face value depends on the type of bond you buy. In the U.S., two types of savings bonds are available to purchase. Series EE bonds are guaranteed to reach their face value after 20 years. Meanwhile, Series I bonds don’t come with guarantees and mature after 30 years. Both bonds can also be cashed out at a cost after one year or penalty-free after five years.
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