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April 06, 2005

Changes to Series EE Bonds

Amey Stone

I'm a big fan of Savings Bonds, which are easy to understand, ultra-safe, have no transaction fees and come with tax benefits. Now the traditional Series EE bonds are getting a little less attractive, since they will no longer automatically reset every six months to match at least 90% of the 5-year Treasury yield.

Instead, they'll maintain the same rate for 30 years. Since rates are likely to continue to rise and you have to hold these bonds for five years to avoid being charged a modest interest penalty, that makes them less of a no-brainer. They are still a great deal for stashing away some savings for a rainy day. But now a buy 'em and forget 'em strategy doesn't make quite as much sense.

I learned about this change from checking out PFBlog's latest post.

11:28 PM


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Treasury is making each product for small saver less attractive, while the rhetoric out of the beltawy is to foster savings.

I bonds have lagged in yield because of the way inflation and cpi is calculated.

no more credit card purchases.

no delivery of "paper" bonds.

how many people will buy if only to see on line.

Treasury surely is playing the gift card game - that people will forget what they have - or heirs will not even know.

Posted by: bruce berger at April 26, 2005 09:01 AM

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