PD P 0026 E
Department of the Treasury
Bureau of the Public Debt
(Revised March 2004)
QUESTIONS AND ANSWERS ABOUT
SERIES EE SAVINGS BONDS ISSUED MAY 1997 AND THEREAFTER
Question: What interest rate does my bond earn?
Answer: Series EE savings bonds purchased on or after May 1, 1997, will earn interest based on market yields
for 5-year Treasury securities. The rate will be 90% of the average yields on 5-year Treasury securities
for the preceding six months.
Question: How long do I have to hold my bond before I can cash it?
Answer: You can cash your bond dated January 2003, or before, any time after 6 months. Bonds dated
February 2003, and after, must be held for one year before they may be redeemed. However, if your
bond is cashed before five years, a 3-month interest penalty applies. In effect, you lose the last 3
months’ worth of interest. For example, if you buy a bond in January 2001 and cash it 24 months later
in January 2003, you get your original investment back plus 21 months of interest. The value of the
bond would be based on the announced rates applied over the 21 month period from January 2001
through October 2003.
Question: How will interest get added to my savings bonds after May 1, 1997?
Answer: Series EE savings bonds purchased on or after May 1, 1997, will increase in value every month. The
bond’s interest rate is compounded semiannually. The rate that Treasury announces each May and
November will be applied to a bond for the 6-month earning period.
Question: How will Treasury set the new rate?
Answer: Series EE savings bonds purchased on or after May 1, 1997, will earn the new higher rates right from
the start. The rate is 90 percent of the average 5-year Treasury market yields for the preceding six
months. Treasury will announce a savings bond rate each May 1 and November 1. The rates
announced each May and November are the annual rates that apply to bonds for that six-month
earning period. For example, the six-month earning period for a bond