Should I cash in EE Savings Bonds?

[jstbcuz]

My grandmother used to buy my kids EE Savings Bonds that when they matured would be worth $50. She is now gone, and I dont know much about them, except they take forever to mature.

The earliest ones I have are 1996 with the most current being 2008. I did notice on some of them that it has Patriot Bond on it.......but still is the series EE bond.

Tell me what you know, and what would be your suggestions.

 

[jstbcuz]

I noticed ING acct was only paying 1% interest........maybe I should just keep them where they are at. Right now they are earning........1.46-3.5% interest.

What do you think?

 

[akcire]

My grandmother used to buy my kids EE Savings Bonds that when they matured would be worth $50. She is now gone, and I dont know much about them, except they take forever to mature.

The earliest ones I have are 1996 with the most current being 2008. I did notice on some of them that it has Patriot Bond on it.......but still is the series EE bond.

Tell me what you know, and what would be your suggestions.

If you google savings bond calculator you can find out how much each is worth based on the series and date of issue. The website I normally use is treasury direct . gov They will continue to collect interest for 30 years from date of issue. The one's from the 90's may be getting a pretty decent rate of return, you'd have to research each one.

I am pretty certain if you use the proceeds for qualified educational expenses (read college) they are tax exempt, but you will have to check on that to be certain.


Honestly CD and savings account rates are dismal at the moment, so you probably would do best to leave the bonds.

You can also convert the bonds to an electronic format with the treasury so you don't have to keep track of the paper.

 

[FozzieFan]

if you don't need them I wouldn't cash them in yet. They take around 17 years to reach face value and I believe continue to earn interest for 30 years. If you want to check what you currently have you can go to treasurydirect.gov, search for savings bond wizard and input your bond serial #s and you'll get the current interest rate and their current value. I'm telling you the bond are currently getting a better rate then most things you can find especially if you're just talking about a few bonds, so I'd put the bonds in a safe place and wait till your kids are older to cash them in.

 

[bdcp]

I cashed in my boys savings bonds when they were in elementary school because savings accounts were paying a much better rate than the bonds. That's not true now, so I say hold onto them for a while. Our boys are 24 and 27 now and they used the money for books for a couple of years at college because that's all it really covered.

 

[camlgt]

The other thing with bonds is they are not totally tax free. They are if they are set up correctly with the names and used for education. Ask your tax advisor for more info. I know I had bonds as a kid and had to pay tax on them because the name info was not done correctly to be tax free.

 

[ceecee]

My grandmother used to buy my kids EE Savings Bonds that when they matured would be worth $50. She is now gone, and I dont know much about them, except they take forever to mature.

The earliest ones I have are 1996 with the most current being 2008. I did notice on some of them that it has Patriot Bond on it.......but still is the series EE bond.

Tell me what you know, and what would be your suggestions.

I still have mine from the 70's and they matured years ago and bo longer make anything in interest...it's hard around here to find a bank to cash them in. It took 20 minutes for the teller to do 10 series EE bonds! I said I'd come back for the others. If they are still getting interest, hang on to them. We did have to claim the interest on our taxes this year.

 

[PatsMom]

For bonds to get the education exception to tax on the interest, they have to be owned by the parent, not the child. And the parent's have to meet income limits. So the bonds in my name I can cash tax free if I use the money for my daughter's education. But the bonds in her name, would be taxed on her income tax return. We aren't talking huge amounts of money so it isn't a big deal. I plan to cash them all in her junior year when she will be spending her semester abroad.

You can also cash bonds that meet the criteria for the education exclusion and deposit the proceeds into a 529 plan. You can do this even if the child is young. So if you want to invest in equities for your children's education, this might be an option.

Most US savings bonds are still paying better interest rates than any other alternative that I am aware of.

 

[minushka72]

Another option as long as they have matured to their face value is to cash them in and use that amount to purchase new savings bonds. The ones we have, which I think are series EE, mature to face value in 5 years although they gain a small amount of interest for 30 years if you don't cash them in. If a savings bond is puchase price $25 then the bond is worth $50 (the face value) at 5 years from purchase. Then you can use that $50 if cashed in to purchase a new bond for $100 face value and so on every 5 years. The difference in cost to face value is reported on the 1099INT as interest income for that tax year so you need to check how that would affect your taxes.

 

[ENSOCK]

I work at a bank and yes they take a good while to cash in. We have to look at the rates and stamp each bond with the correct amount. At the end of the year you will receive a 1099 on the interest. Good luck!

 

[SoonerSarah]

If you grandmother gave them to your kids, then you should hold onto them until your kids are of an age to make a mature decision as to what to do with them.

My DH and BIL were both given some that had been purchased by Grandparents. It was greatly appreciated as it was given to us after we got married and we were able to buy some furniture. My girls have savings bonds.

 

[rockydek]

The formula for bonds maturing is.... divide the interest earned into 72 and that is how long it takes. I remember when the bond was earning 9 percent..It took 8 years to matue. that was over 20 years ago.

My has the economy changed.

 

[Ephany]

Is there a way to track down bonds you purchased but don't actually have in hand? I'm pretty sure I had money withdrawn from my paycheck after I enlisted in the military to buy savings bonds, but there was an option to have them held and not be mailed to you. I was young and stupid and of course I can't find paperwork from almost 2 decades ago.

 

[secretpantssam]

As long as you're not hurting for the cash I say save them until they are fully matured or the children are old enough to cash them in themselves.

 

[dhuba]

You can now turn your paper bonds into electronic bonds on the treasury website, then you can cash them in right on the site and the money will be transferred to your checking account.

 

[PatsMom]

Is there a way to track down bonds you purchased but don't actually have in hand? I'm pretty sure I had money withdrawn from my paycheck after I enlisted in the military to buy savings bonds, but there was an option to have them held and not be mailed to you. I was young and stupid and of course I can't find paperwork from almost 2 decades ago.

If you go to the Department of the Treasury's web site, they have forms that you can fill out so they can do a search to see if you own bonds. We had to help a client with this. They were pretty efficient.

The bonds maturing doesn't really have much to do with whether to hold them or not. The key factors to consider are really what are the interest rates? Are there any penalties for cashing them in? What are they worth? What are the tax implications? Generally savings bonds are fairly competitive as far as interest based investments. I bonds are probably a better buy right now.

 

[Ephany]

Well I contacted the Treasury Department and they directed me to this website: http://www.treasurydirect.gov/indiv/products/prod_paperpayrollsavings_militarysafekeeping.htm I called my branch of service and they confirmed they were holding 5 EE bonds for me! I just have to request them by fax and they'll be mailed out this week.

 

[PatsMom]

Well I contacted the Treasury Department and they directed me to this website: http://www.treasurydirect.gov/indiv/products/prod_paperpayrollsavings_militarysafekeeping.htm I called my branch of service and they confirmed they were holding 5 EE bonds for me! I just have to request them by fax and they'll be mailed out this week.

Congrats on your "found" money!