Government E Bonds Information

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By Brian Nelson
eHow Contributing Writer

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U.S. government bonds are low-risk investments issued to finance the national debt. There are numerous types of these bonds. Each has specific characteristics that determine the amount of interest paid to the bondholder, the length of the bond's term, and how the bond is purchased. These various types of bonds are typically known by their "series" and designated by a letter or combination of letters. Series E bonds are one of these types.

History

Government E Bonds, or Series E bonds were first issued to help fund World War II efforts. They were more commonly known as war bonds. The first E bond was purchased by President Franklin D. Roosevelt. The term E bonds was simply an extension of the original savings bond naming convention. These earlier bonds were called "baby bonds" and were named in sequence as Series A, B, C and D bonds.

Significance

Previous government bonds were sold through post offices. In 1941, when the Series E bond was first issued, a national volunteer program was created in which the country's business leaders and financial institutions helped sell the new bonds. The sale of war bonds in the form of E bonds allowed the country to quickly increase production of war goods and continue funding the war effort. This patriotic angle toward the sale of bonds increased the number of households with such investments and significantly raised awareness of the bonds.

Features

E bonds were originally issued for a fixed-term. The bonds matured after 10 years, but were granted extensions that allowed them to earn interest for either 30 or 40 years, depending upon when they were issued. E Bonds issued between 1941 and November of 1965 were set to earn interest for 40 years. The remaining E bonds issued between December 1965 and June 1980 can earn interest for 30 years.

Misconceptions

Early versions of U.S. savings bonds were sold through the post office. They aren't anymore, but people who remember the practice or have heard about it often still ask about buying bonds at the post office.

Time Frame

Series E bonds were first sold in 1941 and continued to be issued until they were eventually replaced by the Series EE bond in 1990. The last Series E bonds will stop earning interest in 2010. All Series E bonds issued before September 1979 have stopped earning interest.

Size

E Bonds were originally sold at 75 percent of their face value and earned 2.9 percent interest. The original denominations were $25, $50, $100, $500 and $1,000. Later, a $5,000 and $10,000 bond were added, and soldiers were offered a $10 denomination.