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A friend of mine has some older EE savings bonds (circa 1986/87 -- 12 year maturity). Reading through the www.savingsbonds.gov web site, it seems like they should currently be providing a *minimum* of 4% at any time (guaranteed minimum rates). From the site, this reads as follows:

Guaranteed Minimum Rates:

Guaranteed minimum rates were set at the time a bond was issued. This initial minimum rate applies for a bond's original maturity period and is subject to change as a bond enters an extended maturity period. When a bond enters an extended maturity period, its guaranteed minimum rate (for the new period) becomes the minimum in effect at that time for new issues. The guaranteed minimum rates are 4% (for bonds issued March 1993 - April 1995), 4% (for bonds entering an extended maturity period since March 1993), 6% (for bonds issued or entering an extended maturity period between November 1986 - February 1993), and 7.5% (for bonds issued or extended from November 1982 - October 1986).

Currently, they are actually paying him around 2.9%. Does anyone know why they would be paying below the stated minimum?

Thanks for any information you can provide.

ACME
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Just a guess. But if the bond has aged beyond it's 12 years it is no longer guaranteed to be 4% or higher.

"This initial minimum rate applies for a bond's original maturity period and is subject to change as a bond enters an extended maturity period. When a bond enters an extended maturity period, its guaranteed minimum rate (for the new period) becomes the minimum in effect at that time for new issues."

Sounds like they're saying your new guaranteed rate will be whatever rate is tied to new bond issues.
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Read the bolded part again...it states that the guaranteed minimum for bonds reaching their extended maturity period after 1993 (these bonds would not reach extended maturity until 1997/1998) will have a guaranteed minimum of 4%.

ACME
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A friend of mine has some older EE savings bonds (circa 1986/87 -- 12 year maturity)....Currently, they are actually paying him around 2.9%.

Is it possible that you or your friend are mistaken regarding either the purchase dates or the current interest rate?

At present I own numerous EE bonds with issue dates ranging from 11/1984 to 05/1991 and according to the Savings Bond Calculator at savingsbonds.com, ALL of them are currently paying 4.00% interest.

I also own numerous issues from 08/1991 to 11/1992 and they are ALL currently paying 6.00%.

auslander
No. of Recommendations: 0
Is it possible that you or your friend are mistaken regarding either the purchase dates or the current interest rate?

At present I own numerous EE bonds with issue dates ranging from 11/1984 to 05/1991 and according to the Savings Bond Calculator at savingsbonds.com, ALL of them are currently paying 4.00% interest.

If you enter November or December, 1986 as the bond issue date into the Savings Bond Calculator (from www.savingsbonds.gov), you will get a bond that has a current interest rate of 2.8%. If you use January, February, March, or April of 1987, you will get a bond that has a current interest rate of 2.96%.

So I don't think the problem is with our reading of the purchase date or the current interest rate. I have now seen the same result on several machines, so I am confident it is not some weird error on any one of our machines...

Thanks for the note, but we are still at the drawing board on this one...

ACME
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If you enter November or December, 1986 as the bond issue date into the Savings Bond Calculator (from www.savingsbonds.gov), you will get a bond that has a current interest rate of 2.8%. If you use January, February, March, or April of 1987, you will get a bond that has a current interest rate of 2.96%.

The only bonds I own from those two years have issue dates of October 1986 and October 1987 and the Savings Bond Calculator shows all of those bonds at 4.00%.

So, I am mystified as to why the bonds you mentioned show otherwise. I hope you find the answer as I'm really getting curious now.

auslander
No. of Recommendations: 1
This is very strange. October 1996 bonds show an interest rate of 4%, November or December 1996 do show an interest rate of 2.8%.

Talk about OLD, I have some E bonds purchased in Sep. and Nov. of 1965 which show a current interest rate of 2.51%, but one purchased in Feb. of 1965 shows a current interest rate of 4%.

This data is from the Savings Bond Wizard, a free download from the Savings bond site. The column labeled "Yield" for these early bonds show 5.96% or better. I assume this is based on yield from the time of purchase. Yield on the Nov. or Dec. '96 bonds shows at 5.50%

NOTE: BE VERY CAREFUL OF THE DATES YOU CASH A BOND. The money received changes only every 6 months, so the current yield is only in theory. After you have passed an interest date you will get the same cashed in value for 6 months, the next month it takes a jump.

SO, If you cash in the bonds purchased in Nov and Dec. of 1996, your return since April and May has been 0%. Better to wait until Novemer and December when the interest for the last 6 months will be part of your cashed in value.
No. of Recommendations: 2
NOTE: BE VERY CAREFUL OF THE DATES YOU CASH A BOND. The money received changes only every 6 months, so the current yield is only in theory. After you have passed an interest date you will get the same cashed in value for 6 months, the next month it takes a jump.

I do not know too much about the older savings bonds -- my earlier post was about a friend's bonds -- but I know this is not true of the new bonds issued. Once you get past the mandatory holding period, your bonds will acrue interest each month...the Savings Bond Wizard always shows you (for new bonds) the amount you could cash them for that day. During the first 5 years, this value will not include the most recent 3 months worth of interest. After the 5 year penalty period is up, the balance will jump up to include those 3 months...

ACME