Comparing EE and I bonds — TreasuryDirect (2024)

FAQs

What's better, EE bonds or I bonds? ›

Bottom line. I bonds, with their inflation-adjusted return, safeguard the investor's purchasing power during periods of high inflation. On the other hand, EE Bonds offer predictable returns with a fixed-interest rate and a guaranteed doubling of value if held for 20 years.

The cons of investing in I-bonds

There's actually a limit on how much you can invest in I-bonds per year. The annual maximum in purchases is $10,000 worth of electronic I-bonds, although in some cases, you may be able to purchase an additional $5,000 worth of paper I-bonds using your tax refund.

TIPS offer greater liquidity and the higher yearly limit allows you to stash far more cash in TIPS than I-bonds. If you're saving for education, I-bonds may be the way to go.

Maturity dates for Series EE bonds

If you purchase a Series EE bond today, you are guaranteed to earn a fixed interest rate for 20 years, which is when the bond matures. At 20 years, the government ensures that you will be paid double the face value of the bond.

Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.

Series EE savings bonds are a low-risk way to save money. They earn interest regularly for 30 years (or until you cash them if you do that before 30 years). For EE bonds you buy now, we guarantee that the bond will double in value in 20 years, even if we have to add money at 20 years to make that happen.

You can count on a Series I bond to hold its value; that is, the bond's redemption value will not decline. Question: What is the inflation rate? November 1 of each year. For example, the earnings rate announced on May 1 reflects an inflation rate from the previous October through March.

The 4.28% composite rate for I bonds issued from May 2024 through October 2024 applies for the first six months after the issue date. The composite rate combines a 1.30% fixed rate of return with the 2.96% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U).

So are I bonds worth it? Whether I bonds make sense for you depends on your goals. If you only want to beat inflation, they'll ensure that you succeed. But if their $15,000 annual investment ceiling, withdrawal restrictions and interest rate uncertainty are turn offs, there are alternatives.

EE bonds you buy now have a fixed interest rate that you know when you buy the bond. That rate remains the same for at least the first 20 years. It may change after that for the last 10 of its 30 years. We guarantee that the value of your new EE bond at 20 years will be double what you paid for it.

How long should you keep money in an I bond? ›

You can cash in (redeem) your I bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest. See Cash in (redeem) an EE or I savings bond.

Therefore, when you cash in your series EE bonds, you can simply use the proceeds to purchase I Bonds, he said. When you cash in your EE bonds, you will pay federal but not state income taxes on the interest portion of the redemption, he said.

How long should I wait to cash in a savings bond? It's a good idea to hang on to your bond for as long as possible, ideally until it matures, so you can take full advantage of compound and accrued interest.

Series EE bonds mature in 20 years but earn interest for up to 30 years. The U.S. Treasury guarantees Series EE bonds will double in value in 20 years. You don't receive the interest on your Series EE bond until you cash it.

If you moved your EE bond into a TreasuryDirect account, we pay you for the bond as soon as it reaches 30 years and stops earning interest. If you still have a paper EE bond, check the issue date. If that date is more than 30 years ago, it is no longer increasing in value and you may want to cash it.

The current composite rate of 4.28% is only earned for the first 6 months of your I Bond. Your July 2024 I Bonds purchase will turn your $100 into $102.14 just 6 months later. This is a 4.28% annualized rate.