Why electronic EE Savings Bonds aren’t sold at half face value

Thursday, March 30th, 2006
Categorized as: Buying US Savings BondsSeries EE US Savings Bonds

When you buy a Series EE Savings Bond electronically on TreasuryDirect, the amount you invest appears in your account.

When you buy a paper Savings Bond, on the other hand, you receive a bond that has a face value of twice what you invested (for example, a $100 bond for a $50 investment).

It always surprises me how many people think that the paper bonds must therefore somehow be a better deal. I’ve been answering questions about this since I opened this web site (for example, see Savings Bond face value confusion)

Don Taylor, who answers investment questions at Bankrate.com, answered the same question yesterday in his post, A savings bond mystery revealed, and included an extensive quote from Savings Bond spokesperson Stephen Meyerhardt.

First, let me gently make the point that neither Taylor nor Meyerhardt said directly – you will end up with exactly the same amount of money from electronic or paper EE Savings Bonds. Electronic EEs are even guaranteed to double in value in 20 years, just like the paper ones.

Next, let me ferociously make the point that putting a face value on paper EE bonds of twice the actual investment has always been nothing but a marketing gimmick. As Meyerhardt says, it has caused no end of confusion and ill will, since it allows people to give gifts and prizes that are actually worth only half of what they appear to be worth.

To me, one of the great things about TreasuryDirect is that it didn’t indulge in an electronic version of this gimmick, but instead put an end to it.

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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 April 1st, 2006 Ken said:

An interesting statistic would be what percentage of EE bonds given has gifts have never been redeemed even after 30 years. Seems like people who receive these as gifts would more likely misplace it and forget about it. People who have bought EE bonds on their own would likely have a process that will ensure they don’t lose track of the bonds.

So it seems the Treasury might have a lot to gain by making EE Bonds attractive for gift and prize givers.

On April 2nd, 2006 Tom Adams said:

Ken – the Treasury doesn’t have a reliable way to identify which paper Savings Bonds are gifts.

I agree with you that gift bonds are often lost. However, because gift bonds are typically purchased in small demoninations they aren’t a significant percentage of all dollars invested.

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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 Savings-Bond-Advisor.com. 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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