EE bonds provide a fixed interest rate which will remain constant through the life of the bond. I bonds are more complicated, they have a fixed component , and a variable component which changes every 6 months based on inflation. EE bond will always pay a higher yield than the fixed component of an I Bond. In fact, the fixed component of I Bond right now is zero. You earn no fixed interest.
If you don’t think you can wait 20 years to cash in a savings bond, you should not get one. First of all, you cannot legally sell a savings bonds. You can only redeem them with the US Treasury. You’re not allowed to redeem them at all until you have held them for at least 12 months. After that, you have to pay a penalty, which is a minimum of 3 months of interest. Most importantly, the interest rate sucks if you don’t hold EE bonds to maturity. Forget about earning 3.5%, you won’t even receive 1% based on the current rate.
Join the club, there are over $10 billion dollars worth of unclaimed savings bonds. Uncle Sam wants you the have the money and has set up the site TreasuryHunt.gov to help you recover them.
This lesson is part of our Free Guide to Buying Savings Bonds. Continue to the next lessonhere.
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