How Much Is a $50 Savings Bond Worth After 30 Years?

U.S. savings bonds are debt securities issued by the U.S. Department of the Treasury, offering individuals a secure way to invest. These bonds serve as a loan to the federal government. Many bondholders wonder about the long-term value of these investments, especially for older bonds like a $50 savings bond held for three decades. Understanding how these financial instruments accrue value and how to determine their current worth is important.

Understanding Savings Bonds

Savings bonds represent a loan to the U.S. government, backed by its full faith and credit, making them a safe investment. Series EE bonds are the most common type for long-term holdings. Unlike other investments, savings bonds are nonmarketable securities, meaning they cannot be traded publicly. They are redeemable only by the original purchaser, a designated recipient, or a beneficiary.

Historically, paper Series EE bonds were purchased at a discount, typically half their face value. For example, a $50 bond cost $25. Electronic Series EE bonds, the sole method of purchase since 2011, are bought at face value. The issue date, printed on paper bonds or recorded for electronic ones, dictates the bond’s interest accrual schedule and maturity periods.

How Savings Bonds Earn Interest

Series EE savings bonds earn interest over time, accruing monthly and compounding semiannually. Every six months, earned interest is added to the bond’s principal value, and future interest calculations are based on this new, larger amount. This compounding allows the bond’s value to grow steadily. For bonds issued on or after May 1, 2005, a fixed interest rate is set at purchase, applying for at least the first 20 years. Older bonds may have had variable interest rates.

Series EE bonds are guaranteed to at least double in value from their purchase price by their 20-year maturity date. If the interest rate does not achieve this doubling, the Treasury makes a one-time adjustment at the 20-year mark to ensure the value is met. All Series EE bonds continue to earn interest for 30 years from their issue date, then reach final maturity and cease to accrue additional interest.

Calculating a Savings Bond’s Worth

Determining a savings bond’s worth involves using the Savings Bond Calculator on the TreasuryDirect website. This calculator is particularly useful for paper bonds, as electronic bond values are typically accessible directly within a TreasuryDirect account.

To use the online calculator, you need specific information from your bond: its series (e.g., EE), its denomination (e.g., $50), and its issue date (month and year). Entering these details provides an accurate calculation of the bond’s accumulated value, including all earned interest up to the current date. This provides a precise valuation that reflects the interest accrued since the bond’s issue.

Redeeming Your Savings Bond

A savings bond must be held for a minimum of one year from its issue date before it can be cashed. If a bond is redeemed within the first five years, a penalty applies where the last three months of earned interest are forfeited. After five years, there is no interest penalty for redemption.

For electronic bonds, redemption can be completed directly through your TreasuryDirect account, allowing you to deposit funds into a linked bank account. Paper bonds can often be cashed at many financial institutions, such as banks and credit unions; it is advisable to contact them beforehand to confirm their services and requirements. Interest earned on savings bonds is subject to federal income tax, but it is exempt from state and local income taxes. Bondholders typically defer paying federal taxes on the interest until the bond is redeemed or reaches final maturity, at which point a Form 1099-INT is issued. An exclusion from federal income tax on interest may apply if the bond proceeds are used for qualified higher education expenses, subject to income limitations.