Not necessarily. When figuring out what bonds to cash when, you can’t go just by date. Older bonds are not by definition worse than newer bonds. Some of them still earn a 4% guaranteed minimum rate.

In addition, series E bonds issued before December 1965 have a 40-year maturity period, but starting in December 1965 E bonds began to be issued with 30-year maturities. (All series EE bonds and I bonds mature in 30 years.) A lot of bonds holders lose sight of that (and the government doesn’t send statements) so they accidentally cash in bonds that are still earning interest and hold on to ones that aren’t.

When you want to redeem bonds, start with any that have stopped earning interest.

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Yes. Interest is added to savings bonds at specific intervals. If you redeem your bond before the interest is posted, you lose it. For example, if interest is posted in, say, April and October, redeeming bonds in September instead of October would cost you six months’ worth of interest. To see when interest is added to your bonds, use these tables.

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You can use the savings bond calculator on the Bureau of Public Debt’s Web site.

You can also keep track of and value each bond with the free, easy-to-use, Windows-based Savings Bond Wizard program.

If you don’t want to manage your savings bonds yourself, you can get help. For example, U.S. Savings Bond Consultant (www.savingsbonds.com) offers online bond-management tool called Savings Bond Guru.

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No. But “people are under the misconception that savings bonds earn interest as long as they hold them,” says Dan Pederson of the Savings Bond Informer, a bond consulting service.

Americans sitting on bonds that have stopped earning interest are making an interest-free loan to the U.S. government to the tune of $9 billion.

If you’ve got savings bonds and aren’t sure whether they still are earning interest, the Bureau of Public Debt’s Treasury Hunt database can help you find out.

EE bonds earn interest for 30 years. Bonds issued after May 2003 are guaranteed to double in value within 20 years, which is referred to as the original maturity date. The new fixed rate for bonds issued after May 1, 2005, applies to those first 20 years then is extended for the next ten years unless the Treasury Department announces a different rate.

I bonds earn interest for 30 years. The interest accumulates monthly and is compounded every six months.

HH bonds stop earning interest at 20 years. The interest rate is set when you buy them then again at ten years after the issue date.

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They’re very safe (and conservative), and compared with a number of other safe investments, the yield isn’t too bad. As of May 1, Series EE bonds earn 3.5%. That’s about the same as a one-year certificate of deposit, beats money-market deposit accounts and certainly is more than the typical savings or interest checking account.

The current combined rate for I bonds is a respectable 4.8%. This beats many other conservative investments.

Savings bonds are also free of state and local income taxes, so that adds to your yield, too. Check out the effect on the tax advantages calculator.

But keep in mind that you can’t redeem savings bonds for the first year. And if you redeem them in less than five years, you lose the most recent three months’ interest.

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Residents of the United States and its territories (as well as U.S. citizens living abroad) can buy savings bonds. Canadian and Mexican residents who work in the United States, have social security numbers and who can participate in the Payroll Savings Plan through work also can buy savings bonds.

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As of May 1, 2005, newly issued Series EE bonds will have a fixed interest rate, based on 10-year Treasury note yields. The rate currently is 3.5%. These fixed rates will be announced every May and November and the rate that is in effect on the day you buy your bonds will stick with them for at least the first 20 years.

The Treasury will still guarantee that the value of an EE bond held for 20 years will at least double its purchase price. If a fixed-rate EE bond’s stated rate won’t get the job done, the government will make a one-time adjustment so that the average annual return over two decades will be the 3.5% needed to double your money.

You can check the latest rates on the Treasury’s savings bond Web site.

If you happened to buy that bond in April 2005 before the fixed rate took effect, the rate on your bonds would change in October (and be based on the rate announced in May).

I bonds earn interest based on a combination of a guaranteed fixed rate and the rate of inflation. The current fixed rate for I bonds purchased between May 2005 and October 2005 is 1.2% and will stay with the bonds for their entire 30-year lifespan. The inflation-adjusted portion of the yield, now 3.58%, and the fixed rate are set every six months.

HH bonds, currently paying 1.5%, do not increase in value. Instead, investors are paid interest every six months and get face value for the bonds when they redeem them. The interest rate is set when you buy HH bonds and then again ten years after the issue date. They stop earning interest after 20 years.

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• Series EE. Paper Series EE bonds can be purchased at half face value. For example, you pay $25 for a $50 bond. Bonds bought online must be purchased at face value. You can buy up to $30,000 ($60,000 face value) in EE bonds. They come in denominations of $50, $75, $100, $200, $500, $1,000, $5,000 and $10,000. If you redeem bonds less than five years after purchase, you forfeit the three most recent months’ of interest. There is no penalty after five years.
• Series I. These inflation-indexed bonds can be bought only at face value in denominations of $50, $75, $100, $200, $500, $1,000, $5,000 and $10,000. The maximum purchase is $30,000. Like EE bonds you forfeit the three most recent months’ of interest if you redeem I bonds less than five years after purchase.
• Series HH. The Treasury stopped issuing HH bonds on September 1, 2004. Prior to that date, the only way to invest in HH bonds was by trading in your EE bonds.

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If you don’t know the Social Security number of the bond recipient and you are buying a paper savings bond, you may use your own. The Social Security Number printed on the paper savings bond does not establish tax liability or ownership. It is used only to find records if the savings bond is lost, stolen, or destroyed, should the owner not have a record of the serial number.

On paper savings bonds issued or replaced starting August 1, 2006, the first five digits of your Social Security number or Employer Identification number will be masked and replaced with asterisks. This is being done to protect your privacy and to prevent the information from being used for identity theft.

To purchase an electronic savings bond as a gift, the TreasuryDirect account holder needs to know the recipient’s full name and Social Security Number and/or taxpayer ID number. The gift bond is placed in the account holder’s “Gift Box” until the account holder obtains the TreasuryDirect account number of the recipient and is ready to transfer the bond into the recipient’s account. The gift recipient will then receive an e-mail announcing the transfer of the bond.

In a state that has a permanent escheatment law, can the state claim the money represented by securities that the state has in its possession. For example, can a state cash savings bonds that it’s gotten from abandoned safe deposit boxes?

The Department of the Treasury will recognize claims by States for payment of United States securities where the States have succeeded to the title and ownership of the securities pursuant to valid escheat proceedings. The Department, however, does not recognize claims for payment by a State acting merely as custodian of unclaimed or abandoned securities and not as successor in title and ownership of the securities.

In other words, the Treasury recognizes escheat statutes that provide that a State has succeeded to the legal ownership of securities because in such case payment of the securities results in full discharge of the Treasury’s obligation and this discharge is valid in all jurisdictions.

But, payment of securities to a State claiming only as a custodian results in the substitution of one obligor, the Department of the Treasury, for another, the State. Not only is there serious question whether there is authority for a State to effect such a substitution, but also there seems to be no basis for believing that payment to a State custodian would discharge Treasury of its obligation. Even if the discharge were claimed effective in the State to which the payment is made, it is believed that the Treasury’s obligation and liability would still remain in force in all other jurisdictions.

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Many people ask this question - How long until i can cash in my savings bonds? The answer is - at least a year. Of course the smart thing to do here would be to hold these savings bonds for at least 5 years or you can get a penalty otherwise.

Cash savings bonds - simple questions, simple answers.

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