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1.5) How do market rates affect bonds?

    E/EE bonds and Savings Notes issued prior to May 1995 are entitled to market-based yields if they've been held for at least five years and if such rates produce a value greater than derived from the application of guaranteed minimum yields. (Market yields are based on 85% of the average of 5-year Treasury marketable security yields).

    EE bonds issued on or after May 1995 do not have a guaranteed rate of return. EE bonds issued May 1997 or later earn interest based on 90% of the average yields on 5-year Treasury securities for the preceding six months. These bonds increase in value every month and interest is compounded semiannually. The new rate is announced each May 1 and November 1.

    EE bonds issued May 1995 through April 1997 earn short-term market-based rates during the first five years after issue and long-term market-based rates from 5 years through 17 years. The rate your bond is earning is adjusted to market-based rates every six months. New rates are announced each May 1 and November 1.

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1.6) What is the easiest way to find out the current interest rate on my E and EE bonds?

    Just take a look at our Savings Bond Earnings Report on the Savings Bonds website. This report will tell you what your bond is currently earning and will give you the current value of $100 E and EE bonds. If you don't happen to have $100 bonds, it's no problem. It's simple to calculate the value for bonds of other denominations since they are proportional. For example, if you have a $50 bond, just divide the value of the $100 bond by 2. If you have a $500 bond, multiply the value of the $100 bond by 5.

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1.7) Why do some bonds show very low semiannual earnings in the Earnings Report?

    Some Series E and EE Bonds are still covered by an old market-based interest formula that was modified in May 1989. Under this formula, the market-based rate was rounded to the nearest 1/4 percentage point. Since market rates have generally declined during that period, the market-based rate would sometimes decline by 1/4 percentage point. Redemption values are based on the market- based rate (or higher guaranteed rate) for the period during which the bond/note is entitled to market-based investment yields, not each separate semiannual interest period; so during such a semiannual interest period the increase in the bond's value would be far below current rates.

    Bonds issued or entering extended maturity periods since May 1989 are no longer subject to quarter-point rounding. Interest is calculated to the nearest .01% and there are no more exceptionally large changes in current interest yields. Eventually, no Savings Bonds will remain under the old formula.

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1.8) I have some old bonds that have reached final maturity. What can I do with them?

    Series E/EE bonds and Savings Notes can be redeemed at final maturity or they can be exchanged for Series HH current income bonds. If you redeem your bonds, and you have deferred reporting interest for Federal income tax purposes, you should report all accrued interest in the year in which they reach final maturity. If you exchange your matured bonds for HH bonds within a year after they reach final maturity, you can continue to defer reporting interest earnings on the exchanged E/EE securities until the HH bonds are redeemed, disposed of, or reach final maturity. H/HH bond interest must be reported annually. PLEASE NOTE: The Treasury Department will no longer issue HH/H bonds after August 2004. After August 31, 2004, you will no longer be able to reinvest your HH/H or exchange your EE/E bonds for HH bonds.

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Keep in mind that these questions may not fit all situations and are only intended as guidelines. Please visit the Savings Bonds website at www.savingsbonds.gov, or see your organization's Savings Bonds contact if you have any questions