How to Calculate Savings Bond Interest

U.S. savings bonds are issued in two forms by the federal government, Series I or Series EE, both financed through the Department of Treasury while supervised by the Bureau of Public Dept. They serve the government by fulfilling dept obligations and the purchaser with a secure, long term tax deferred investment. The average bond takes 17 years to mature, but keeps accruing interest for 30 years. Savings bonds may sound complex, but determining their value is simple.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Savings bond(s)
• Online savings bond calculator

1. Obtain the bond(s) and access an online savings bond calculator to determine the savings bond value. Choose between Series I and Series EE and one of the eight different denominations available from a drop down box.

2. Start by entering the issue date and possibly the serial number which are both printed on the bond. The current value may then be calculated. Most online calculators allow the investor to build an inventory of bonds if there are multiple savings bond values to figure.

3. Change the calculator's "value as of" date to calculate a past or future savings bond value.

4. Calculate interest for Series I bonds by the printed bond price. Interest compounds every six months and accrues monthly to give the investor a guaranteed real rate of return.

5. Figure the amount of interest for a Series EE bonds by dividing half the value of printed bond price. Interest compounds every six months and accrues monthly so that in 20 years the investor is guaranteed full face value.

Tips & Warnings

• Savings bonds are only available to those in the U.S. with valid social security numbers. Residents of Puerto Rico as well as civilian and military personnel in the U.S. Armed Forces can also purchase bonds. Some foreign residents working within the U.S. may be able to purchase U.S. savings bonds through companies that offer a savings plan.
• Some foreign residents working within the U.S. may be able to purchase U.S. savings bonds through companies that offer a savings plan.
• Earned interest is state and local tax exempt. Federal taxes are postponed until redemption or maturity. Federal taxes may even be exempt if the bond is used to pay for an owner's educational costs including those of a spouse or child.
• If a bond is cashed less than 5 years after its issue date, it's subject to a 3-month interest penalty.

Resources

• Online savings bond calculator