OT- Savings bonds. When to cash in?

[KarenAylwood]

My mom found a bunch of savings bonds that I had been given when I was younger- from 1 to 3 years old (I'm now 24). Using the Savings Bond Calculator on the Treasury website- they are together worth about $655.

It gives the interest rate and when each stops accruing interest- which is around 2012 to 2015. In 2000, they were earning anywhere from 4% to 6% interest. Today they are all earning 4%, while one is earning 3.47%.

With inflation and the fact that ING is giving 4.35% now (more than any are currently making), should I cash these in and just put them into my ING savings account?

I'm wondering if the interest rates just go down or if they fluctuate over the years. If they went up significantly I'd be inclined to hold on to them, if they would stay about the same I'd rather be accruing interest in ING. I don't NEED the money right now, I'm just wondering which would be more profitable? (And a side note- no, I wouldn't just go out and spend the $$, I don't touch any of the savings in my ING because it's more of an emergency fund that I'm working at building up).

TIA!

 

[plummer925]

My mom found a bunch of savings bonds that I had been given when I was younger- from 1 to 3 years old (I'm now 24). Using the Savings Bond Calculator on the Treasury website- they are together worth about $655.

It gives the interest rate and when each stops accruing interest- which is around 2012 to 2015. In 2000, they were earning anywhere from 4% to 6% interest. Today they are all earning 4%, while one is earning 3.47%.

With inflation and the fact that ING is giving 4.35% now (more than any are currently making), should I cash these in and just put them into my ING savings account?

I'm wondering if the interest rates just go down or if they fluctuate over the years. If they went up significantly I'd be inclined to hold on to them, if they would stay about the same I'd rather be accruing interest in ING. I don't NEED the money right now, I'm just wondering which would be more profitable? (And a side note- no, I wouldn't just go out and spend the $$, I don't touch any of the savings in my ING because it's more of an emergency fund that I'm working at building up).

TIA!

Just keep in mind - when you cash them in you will pay tax on the interest (unless you use it for college...check your tax advisor though!).

I didn't know that the interest rates were still that high - last I heard it was only about 2 1/5 percent, making ING a MUCH better investment.

If you're in a lower tax bracket now than you'd be in 5-10 years, it makes since to cash out now, pay taxes NOW instead of THEN (with this low of an amount, it won't be a whole lot of savings, but STILL), and invest where you want (ING or another awesome savings company like that!).

 

[disneysteve]

If you do decide to cash in bonds, be sure to check when the next interest payment is due and cash them in just after that. You could potentially lose 6 month's worth of interest if you cash the bonds in one day too soon.

Also, keep in mind that ING is not paying competitive interest rates and hasn't been for quite some time. Several online banks are over 5%. I believe the highest now is emigrantdirect.com. They are paying 5.15%, nearly a full point higher than ING.

 

[GOOFY D]

Steve - Do you know much about emigrant? Is it safe?

 

[sara74]

Not Steve here, but we went with Emigrant when we just set up an online bank account a few months ago. They were recommended by Money magazine, paid the best interest and I think DH looked them up elsewhere to be sure they were safe. So far, so good with us!

Hope this helps!

 

[disneysteve]

Steve - Do you know much about emigrant? Is it safe?

Emigrant bank has been around forever and is perfectly safe, just as safe as ING. Over at savingadvice.com, there is a steady stream of posts about who has the best rates and there are lots of satisfied Emigrant customers.

 

[Angela&Kayla]

If you don't plan on using the money for quite some time, you could always roll them over into new savings bonds (and thus could potentially forget about them for another few decades). I did this because if I ever get really tempted to spend the money, it would take A LOT of work to get the money liquid. Just a thought...