U.S. Savings Bonds

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2 total messages Started by David Claus Thu, 10 May 1984 18:39

#10

Author: David Claus
Date: Thu, 10 May 1984 18:39

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I have a question about how intersest is computed on the EE Series
US savings bonds that are available through payroll deduction.

After you hold the bond over 5 years and then decide to cash it,
do you receive 85% of the treasury rate for every year you have held
the bond or do you receive 5.5%, 6.0%, 6.5%, 7.0%, and 7.5% for
years 1 through 5 and then 85% of the treasury rate for every year
after the fifth.

This can make a big difference in the final value of the bond,
and I haven't been able to figure which is correct.
Does anyone know for sure?

Thanks,

Dave Claus
AT&T Consumer Products/Indy

Re: U.S. Savings Bonds

#11

Author: Don Stanwyck
Date: Thu, 17 May 1984 04:22

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The interest on the savings bonds are accumulated at the 85% of
treasury bond rates from the beginning.  What happens, in effect,
is that you pay an interest penalty for cashing them in less than
5 years + 1 day.  That penalty is that the interest on the bond
is recalculated to a straight per annum rate determined by the
length of time that you held the bond.  Once you reach the 5 year
+ 1 day point, interest is paid as though it had always received the 85%
rate.
-- 
 ________
 (      )					Don Stanwyck
@( o  o )@					312-979-3062
 (  ||  )					Cornet-367-3062
 ( \__/ )					ihnp4!ihuxr!stanwyck
 (______)					Bell Labs @ Naperville, IL

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