Hope you're all having a great week. I wanted to start a discussion about something that many of us probably have tucked away in a dusty file cabinet, a forgotten safe deposit box, or maybe even inside an old greeting card from Grandma: U.S. Savings Bonds.
We tend to think of them as these simple, almost boring, set-it-and-forget-it investments. A gift for a newborn, a prize from a school fundraiser. But what if I told you that these humble paper certificates have some genuinely surprising secrets and hidden features?
I was recently helping my parents clean out their attic and we stumbled upon a whole stack of Series EE bonds from the late 80s and early 90s. It sent me down a rabbit hole, and what I found was fascinating. So, for anyone else who might be sitting on some old bonds, here are a few "Did You Know?" facts that could save you—or even make you—some serious money.
1. The 30-Year Cliff: They Stop Earning Interest ENTIRELY
This is the single most important thing to know. After exactly 30 years from their issue date, both Series EE and Series I savings bonds stop accruing interest. Period. Full stop.
It's not that the interest rate drops to zero; the bond literally matures and is done. Think of it like a gift card that you've used up. The money is still yours, but it's no longer growing. It becomes a non-productive asset, and every day it sits uncashed, inflation is slowly eating away at its purchasing power. A $1,000 bond that matured last year is still worth $1,000 today, but that $1,000 buys less than it did a year ago.
So, if you have a bond from 1994 or earlier, it's time to cash it in! It's dead money just sitting there.
2. The "Guaranteed to Double" Rule: An Old-School Perk
Here's a cool feature you won't find on modern bonds. Many older Series EE bonds (generally those issued between 1980 and the mid-2000s) came with a fantastic safety net: they were guaranteed to double their face value after a certain period, often 20 years.
Why did this exist? It was a promise from the government. If the variable interest rates over those 20 years were so low that your bond didn't naturally double in value, the Treasury would make a one-time, lump-sum adjustment on its 20th anniversary to get it there. So, that $50 bond you got as a kid (which you paid $25 for) was guaranteed to be worth at least $50 after two decades, no matter what happened with interest rates.
It's a neat piece of financial history and a reminder of how these products were designed to be incredibly safe long-term holds. If you have a bond that's around 20 years old, it's worth checking to see if it benefited from this one-time bump!
3. The Great American Treasure Hunt: Billions in Unclaimed Bonds
This one blew my mind. According to the U.S. Treasury, there are tens of billions of dollars (the last figure I saw was over $25 billion!) in matured, uncashed savings bonds just floating out there.
Think about it: people receive bonds as gifts, move houses, forget where they put them, or pass away without their relatives knowing the bonds exist. These certificates get lost, but the Treasury still has a record of them.
The best part? You can search for them! The Treasury has a free tool called Treasury Hunt. You just need a Social Security Number to search their records for matured, uncashed bonds. It's a fantastic resource. I'd highly recommend checking it not only for yourself but also for your parents or grandparents (with their permission, of course). You never know—you might just uncover a forgotten nest egg.
4. The Super-Secret Tax Advantage for Education
Most people know that savings bond interest is exempt from state and local taxes, which is a nice perk. But there's a much more powerful, and lesser-known, tax break available: you might be able to avoid paying federal income tax on the interest, too.
This is known as the Education Savings Bond Program. If you cash in eligible bonds and use the proceeds to pay for qualified higher education expenses for yourself, your spouse, or a dependent, the interest you earned can be completely tax-free.
There are a few important rules:
- The bond must have been issued after 1989.
- You must have been at least 24 years old when the bond was issued in your name.
- There are income limitations that apply in the year you cash the bond and pay for the expenses. These limits change, so you'll want to check the latest rules on IRS Form 8815.
Even with the rules, this is a huge potential benefit that many people miss out on. If you're planning for college costs, it's absolutely worth seeing if you can use old savings bonds to pay for a portion of it tax-free.
So, that old piece of paper might be more interesting than you thought! It could be a ticking clock on earnings, a relic with a cool guarantee, a clue in a treasure hunt, or a secret weapon for paying tuition.
I'd love to hear from all of you. What's the oldest savings bond you've ever found? Did you discover any forgotten money for yourself or a relative, or have you ever used the education tax break?
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