Savings Bond Series EE face value confusion

Friday, December 17th, 2004
Categorized as: Series EE US Savings Bonds

Why would I buy an EE savings bond online from TreasuryDirect, where I’ll pay dollar for dollar, rather than buy a paper EE bond at a bank and pay only half the dollar value?

Tom’s response

From an investor’s perspective, TreasuryDirect’s online Savings Bonds and paper Savings Bonds are exactly the same. In each case you invest a certain amount of money and your investment earns exactly the same amount of interest.

For EE bonds, which are guaranteed to double in value in a certain number of years, the guarantee works the same way for both paper and electronic bonds.

The confusion here is caused by the paper EE bonds having a face value of twice your investment. Even a clock that has stopped is right twice a day, while a paper Savings Bond will probably never be worth exactly its “face value,” but someday will be worth a bit less than that one month and a bit more than that the next.

The face value feature of paper EE bonds is basically a marketing gimmick that the Treasury, with our thanks, has stopped using on new products, including I bonds and electronic EE bonds.

In terms of everything but the financially meaningless marketing gimmick, paper and electronic bonds are exactly the same thing.

There’s more on this issue in the post Why electronic Savings Bonds aren’t sold at half face value.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:


On February 13th, 2008 Roger E. Harris said:

I know bonds can be used, tax free, to pay for college tuition, but can they be used in the same manner to pay for room and board at college?

On February 14th, 2008 Tom Adams said:

Roger – No. (More info here.)

Tom Adams

On April 3rd, 2008 christine browning said:

How much to buy a $1000 I bond

How much to buy a %5000 I bond

How much to buy a $1000 EE bond

How much to buy a $5000 EE bond

On April 4th, 2008 Tom Adams said:

Christine – The better question is which would you rather have, a $1,000 face value EE bond that’s actually worth $500, or a a $1,000 face value I bond that’s worth $1,000?

Whether you invest in EE or I bonds, you invest a certain amount of money and you earn interest on that money. Although the “face value” of the EE bond is twice what you invested, this is meaningless. It doesn’t make EE bonds somehow worth more than I bonds. It’s a marketing gimmick.

So – when you invest in I bonds, you get a bond that has the amount you invested on it ($1,000 = $1,000; $5,000 = $5,000). When you invest in EE bonds, you get a bond that has the amount you’ll have after 20 years on it. (Invest $500, bond says $1,000; invest $2,500, bond says $5,000.)

Tom Adams

On April 10th, 2008 Cindy Carriero said:

Could someone tell me when the EE bonds reach their maturity.When I was a kid they matured in 7 yrs.So if you by a $100 bond for $50 today when could it be cashed in for $100.Thanks you for your help

On April 11th, 2008 Tom Adams said:

Cindy – the information you’re looking for is here. (And EE bonds have never doubled in value in seven years; the minimum was eight years for EE bonds issued between May 81 and Oct 82. And now we know how young you are.)

Tom Adams

On April 16th, 2008 Lalie said:

We have bonds that have matured & not matured. We paid for our daughter’s college but she got a loan when she went for her masters. My question is, can we cash these bonds, use it to pay for the loan and not pay tax on the inteest earned?

Thanks for any help you can give us.

On April 17th, 2008 Tom Adams said:

Lalie – Here’s my page about the college education deduction, but the short answer is no, you can’t do that.

Tom Adams

On April 2nd, 2010 Terri said:

I am confused on some ee bonds I purchased can they be worth more than the face value?

On April 5th, 2010 Tom Adams said:

Terri – yes. If you hold them for the full 30 years they pay interest, Savings Bonds are always worth more than their face value.

Tom Adams

On April 15th, 2010 Bill Barrow said:

What was the maximum dollar amount of EE bonds one could buy in a year in the 1980s? Thank you.

On April 19th, 2010 Tom Adams said:

Bill – I don’t have a complete history of changes, but the original press release about the $5,000 annual limit includes this:

Savings bond purchases have been subject to an annual limit since Series E Bonds were first issued in 1941. Over the years, limits have been adjusted by the Treasury Department several times and have ranged from a low of $3,750 (at issue price) for Series E bonds from 1941 through 1947 to the $30,000 (issue price) limit that most recently applied to both Series EE and Series I bonds. The limit was last set at $5,000 (issue price) in 1973.

Of course to be meaningful, you’d have to adjust these values for inflation to compare with the current limit. When you do that, you find the current limit is absurdly low compared to the others.

Tom Adams

Comments Closed

June 1, 2010

After six years, over 400 posts, 3,680 real comments, and over 90,000 spam comments (thank you, Akismet, for making managing a blog with comments possible), I am closing public comments on I will contine to update the main articles on this site, but not the comments.

Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for. If you have a copy of Savings Bond Advisor, you can ask me a question here.

Tom Adams

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