Savings Bonds as emergency funds

Thursday, December 23rd, 2004
Categorized as: Savings Bonds and competitive investments

I know that you can’t cash in a series EE savings bond within a year, but what happens if it is a real financial emergency and the funds are needed?

Tom’s response

If there’s a major natural disaster like a hurricane, the Treasury will specify specific counties where residents can redeem Savings Bonds in less than a year. However, beyond that there are no exceptions.

One strategy for dealing with this is to use Treasury Direct and put half your money in savings bonds and half in a zero-percent certificate of deposit.

Enter a scheduled transaction to move the zero-percent certificate into a savings bond ten to twelve months from now.

All of your money is now out of your spendable accounts, but if there’s an emergency the first year, you can cash in the zero-percent certificate. If there’s an emergency the second year, you can cash in the original savings bonds. After two years all of your money is available to you in an emergency.

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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 December 23rd, 2004 Anonymous said:

Why half in a zero-percent certificate? It pays no interest. Why not put half in a savings account?

On December 24th, 2004 Tom Adams said:

A savings account is a reasonable alternative, but some people find it hard to save money that’s so easily available. It’s harder to spend money locked away in Treasury Direct.

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June 1, 2010

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