Both mature 30 years after they are issued. Once a bond reaches maturity, it no longer accrues interest. Series I bonds, also known as I bonds, carry a variable interest rate. The rate has two components: a fixed rate of 1.3% plus a variable rate that changes twice annually based on inflation.
They're available to be cashed in after a single year, though there's a penalty for cashing them in within the first five years. Otherwise, you can keep savings bonds until they fully mature, which is generally 30 years. These days, you can only purchase electronic bonds, but you can still cash in paper bonds.
After 20 years, the Patriot Bond is guaranteed to be worth at least face value. So a $50 Patriot Bond, which was bought for $25, will be worth at least $50 after 20 years. It can continue to accrue interest for as many as 10 more years after that.
One of the most attractive benefits of EE bonds is the guaranteed return. The U.S. Treasury pledges that these bonds will double in value if held for 20 years, translating to an effective interest rate of about 3.5% per year over that period.
All Series EE Bonds reach final maturity 30 years from issue.
For Series EE, Series HH, or Series I bonds, proof of death of a beneficiary is not necessary. We don't return death certificates or other legal evidence. TO CASH BONDS: Series EE, Series E, and Series I bonds can be cashed at most financial institutions.
TAKEAWAYS: Not losing money by holding a bond until maturity is an illusion. The economic impact of market rate changes still impacts investors holding bonds until maturity. A bond index fund provides an investor with greater diversification and less risk.
With that in mind, you have one option for avoiding taxes on savings bonds: the education exclusion. You can skip paying taxes on interest earned with Series EE and Series I savings bonds if you're using the money to pay for qualified higher education costs.
Do Savings Bonds Double Every 7 Years? There is no set rule about savings bonds doubling after seven years. Series EE bonds are guaranteed to double in value after 20 years. Series I bonds don't offer guarantees and may not double in value at any guaranteed point.
Bonds purchased between 1997 and 2003 had an original maturity timeline of 17 years after the date they were issued, meaning they would be worth at least double after 17 years. But these bonds, whether you were gifted them in 1999 or 2019, will continue earning regular interest until the bond reaches 30 years old.
I-bonds are also attractive because investors bear almost no risk of losing their principal. The composite rate can never be less than 0%, even during deflationary periods when the inflation rate is negative.
We sell Treasury Bonds for a term of either 20 or 30 years. Bonds pay a fixed rate of interest every six months until they mature. You can hold a bond until it matures or sell it before it matures.
Once a Series EE bond reaches its final maturity, it stops earning interest, but there are no penalties associated with holding onto it beyond that point. After the 30-year period, the bond has reached its maximum value and it won't continue to accrue interest.
Bonds usually go up in value when the stock market crashes, but not all the time. The bonds that do best in a market crash are government bonds such as U.S. Treasuries. Riskier bonds like junk bonds and high-yield credit do not fare as well.
All bonds carry some degree of "credit risk," or the risk that the bond issuer may default on one or more payments before the bond reaches maturity. In the event of a default, you may lose some or all of the income you were entitled to, and even some or all of principal amount invested.
Investors who hold a bond to maturity (when it becomes due) get back the face value or "par value" of the bond.
The Education Tax Exclusion
The IRS lets you avoid paying taxes on interest earned by Series EE and Series I savings bonds when you redeem them if you use the money toward qualified higher education costs for yourself, your spouse, or any of your dependents.
Upon the death of the bondholder, the bond value is typically included in the estate for IHT purposes. The tax treatment can vary depending on whether the bond is an onshore or offshore product. For onshore bonds, corporation tax paid by the insurance company can affect the overall tax liability.
The interest you earn on EE savings bonds is subject to federal income, gift, estate, and excise taxes but is exempt from state and local income taxes. The taxation depends on who owns the bond, even if the ownership is split amongst individuals.
There is no limit on the total amount that any person or entity can own in savings bonds.
Bottom Line. I bonds offer inflation-adjusted interest rates, which can make them a popular option for investors looking to preserve the purchasing power of their investments. EE bonds, on the other hand, may appeal to those seeking predictable, long-term returns, due to their fixed interest rates and tax advantages.