Timing of Savings Bond early-redemption penalty
Monday, March 27th, 2006
Categorized as: Cashing in US Savings Bonds
Does the five-year holding period required to avoid an early-redemption penalty end five years after a Savings Bond’s exact issue date?
No, the five-year holding period ends on the first day of the month of issue, so it’s actually a bit shorter than five years.
For example, the redemption value of a Savings Bond issued on any day in March 2001 jumped on March 1, 2006 because there was no longer an early redemption penalty.
The penalty, which is the most recent three months of interest, has already been deducted when you look at Savings Bond redemption values in our calculator or elsewhere.
When a Savings Bond reaches its fifth anniversary, its redemption value will jump up by a relatively large amount.