How to Tell if a Savings Bond Is Fully Mature?

How to Tell if a Savings Bond Is Fully Mature?
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Every investor has a unique risk tolerance level, which is why so many investing instruments exist. Bonds are one category of such instruments. And they are an excellent option for anyone with a low risk tolerance level. That is because they offer a predictable return rate and will preserve your capital.

U.S. savings bonds are an excellent example of the many types of bonds that exist.

How Bonds Work

Suppose a company or local, state or national government wants to finance their activities. They could choose to issue bonds, which are a debt security. In that case, in exchange for the money you lend them, they will pay you interest at a specified rate for as long as the agreement lasts.

Once that period, known as the maturity period, is over, you will get back your original capital. However, you will not gain any equity in the projects the issuing entity starts using your finances.

Therefore, your return is the sum of all the interest you have been paid until you sell or redeem your bond.

Savings Bonds: An Introduction

U.S. savings bonds are named thus because they are issued by the U.S. Department of Treasury. Since they are backed by the full faith and credit of the U.S. government, they are considered one of the safest investments around.

For most issued these days, the saving bond's maturity level tends to be ​30 years​ or until the point at which you decide to cash them in. Remember, you cannot sell these kinds of debt instruments in the secondary market.

If you redeem them before a ​five-year​ period is complete, you will forfeit the last ​three months’​ worth of interest. In addition, you cannot buy more than ​$20,000 worth of all types of savings bonds in a single calendar year.

Saving Bonds Maturity Period

As previously stated, savings bonds’ maturity periods are usually 30 years for those issued in recent times. The period consists of the original maturity period and one or two extension periods.

Typically, Series I Savings bonds, which are inflation-indexed, usually have one ​10-year​ extension added to a ​20-year​ original maturity period. On the other hand, the Series EE savings bonds, which are an accrual type of bond offered at fixed interest, may have one or two extensions added to the original maturity period. After that, you can no longer benefit from accrued interest.

But that has not always been the case. Previously issued bonds in the decades past had shorter or longer final bond maturity periods.

For example, Series E bonds issued from May 1941 to April 1952 had an original 10-year maturity period. However, their final maturity period ended up being 40 years, which means they are no longer valid.

On the other hand, Series E Bonds Issued from May 1952 to January 1957 had an original maturity period of nine years and eight months. However, their final maturity period ended up being 40 years, and they are no longer valid as well.

How to Determine Bond Maturity

The easiest way to determine the bond maturity period is to add 30 years to the issuing date for both paper and electronic bonds. The date is printed below the series designation on paper bonds.

But for the electronic versions, you can log in to your TreasuryDirect.Gov account and find out the issuing date. Having the series designation could help you do that.

Also, if your bond is no longer earning interest and there is no increase reflecting on your account after the specified period, you can assume its final maturity period is complete. But you can always confirm that using the Treasury Department’s lists of bonds that are no longer paying interest. Remember, some may have been recalled earlier than the maturity date set.

Bond Value at Maturity

The value of the bond at maturity varies. For a Series EE savings bond, your bond value will double after 20 years. So, if you invested $50, it would be worth $100 after 30 years.

On the other hand, a Series I savings bond will be worth the original bond value plus the sum of the accrued interest compounded until the point of redemption.