Savings Bonds: How EE Bonds Increase in Value

The savings bond rate is the variable interest rate at which Series EE savings bonds earn interest. The rate is a percentage of the average market yield on outstanding five-year Treasury securities. During the first 17 years of bond ownership, your bond will have a rate of 90% of the market yield on outstanding five-year Treasury securities. For the remaining 13 years of bond ownership, your bond can earn interest using the same calculation unless regulations have been changed. The savings bond rate is NOT the same as the annual percentage yield (APY) that financial institutions must disclose to their customers. As of July 20, 2001, the current rate for Series EE savings bonds is 4.5%.

Savings bonds rates are announced in May and November. The month when you purchase a savings bond will establish its two semiannual savings periods. The first period is determined by the date when you purchase it, and the second period will be six months later. The rate for your bond is then applied according to the closest announced rate before the bond’s issue date.

For example, if you purchase your bond in March, your rates would change in March and September. The rate you would get in March would be based on the savings bond rate announced the previous November. The rate you would get in September would be based on the rate announced the previous May.