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Savings-Bonds-Alert: Bond Reaches Original Maturity Guarantee

Thursday, July 01, 2004

Bond Reaches Original Maturity Guarantee

I have a $10000 Series EE Savings Bond that was purchased in August 1992 that is currently paying 6% interest and matures in August 2004. It is in my name and my brother is co-owner of the bond. Will this bond continue to pay 6% interest beyond the maturity date of August 2004 and if not, what would the new rate be? How do we go about redeeming it when it matures in August 2004. Tom's response On August 1 this bond reaches its "original maturity guarantee". This means that when you bought it the Treasury guaranteed it would reach face value in 12 years (for a bond you buy today, it's 20 years!). The good news is that it will actually be worth a little more than that - $10,164. The bad news is that on August 1 the guaranteed rate will drop to 4% from the current 6%. Nonetheless, 4% is better than what you can get with a new Savings Bond and much better than comparable investments. Series EE bonds don't reach final maturity for 30 years - so this bond will pay interest until 2022, if you want to keep it that long. To redeem it, take it to your bank. The process is a lot like depositing a check into your account. Since the bond is co-owned with your brother, there are some issues around how to report the income tax on the Savings Bond interest you've earned. Click here to visit the premier independent web site for Saving Bonds owners.


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