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Series EE Bond


A Series EE Bond is a type of U.S. savings bond issued by the federal government. It is a low-risk investment product with a fixed rate of interest, often used for education savings or gifting. The bond matures for full cash value after 20 years.


The phonetics for “Series EE Bond” are: ˈsɪəriːz ‘i:’ bɑnd

Key Takeaways

  1. Series EE bonds are a type of savings bond issued by the U.S. Department of the Treasury. They’re designed to help investors save money in a safe and reliable manner, as they are backed by the full faith and credit of the U.S. government.
  2. The interest earned on Series EE bonds is typically exempt from state and local taxes, and federal taxes can be deferred until the bond is redeemed or stops earning interest after 30 years. This can make Series EE bonds a beneficial choice for long-term savings.
  3. Series EE bonds have a fixed interest rate for the life of the bond. This means the interest rate at the time of purchase remains the same until the bond’s maturity date, which ensures that the investor knows exactly what return to expect.


A Series EE Bond is a type of U.S. government savings bond which is important for numerous reasons. Crucially, it provides secure and risk-free investment opportunities to individuals. Backed by the full faith and credit of the U.S. government, they guarantee the return of the principal amount invested. Additionally, Series EE Bonds earn a fixed rate of interest over their lifespan, thus ensuring a predictable income stream for investors. They also have significant tax advantages; the interest earned is exempt from state and local taxes, and federal taxes are deferred until redemption or final maturity, potentially offering valuable estate and gift tax benefits. Lastly, the bonds can be easily purchased online or through financial institutions, offering accessibility to the public.


The primary purpose of Series EE Bonds, also known as Patriot Bonds, is to aid investors in preserving and gradually increasing their savings while minimizing risk. As low-risk investments issued by the U.S. Department of the Treasury, they provide a reliable method for individuals to contribute to their savings, safe from the volatility of other markets like stocks or mutual funds. This makes them an ideal investment vehicle for those looking for a secure, long-term investment, such as parents or grandparents saving for a child’s college education. The predictability and peace of mind that Series EE bonds offer can be very appealing to a certain group of savers.

Furthermore, another significant appeal of Series EE Bonds is their tax advantage. They are exempt from local and state taxes, and federal tax on the earned interest can be deferred until the bond is cashed in, or until it reaches its maturity at 30 years. This feature allows the interest earned to compound unimpeded over many years, resulting in a higher yield. In addition, if the proceeds are used to cover higher education expenses, the interest can be exempt from federal tax. Such attributes make Series EE Bonds a beneficial component of a diversified savings strategy.


1. Saving for College: A parent can purchase Series EE bonds to help finance their child’s college education. The parent can use the accrued interest and capital once the bond reaches maturity to pay for tuition and other education expenses. Moreover, under certain conditions, the interest on these bonds may be tax-free if used for qualifying educational purposes, making it a popular choice for educational savings.

2. Retirement Investment: A retiree may invest in a Series EE bond as part of their retirement strategy. The bond offers a reliable, albeit smaller, return and is a secure investment as it’s backed by the U.S. government. By investing part of their retirement savings in these bonds, the retiree can ensure a steady stream of income over the bond’s 30-year term, aiding their financial stability during retirement.

3. Corporate Investment: A corporation might invest its idle cash in Series EE bonds as a way of ensuring a risk-free return on its investment. While the interest rates on these bonds might be lower compared to other investment avenues, they offer the security of consistent returns and minimized risk, which may be preferable in uncertain market conditions.

Frequently Asked Questions(FAQ)

What is a Series EE Bond?

A Series EE Bond is a type of U.S. savings bond issued by the government that pays a fixed rate of interest over a set period of time, usually up to 30 years.

How does the interest work on a Series EE Bond?

The bond earns interest from the first day of its issue month. You earn interest every month and the interest is compounded semiannually.

When can I redeem a Series EE Bond?

Although Series EE Bonds mature after 20 years, they can be redeemed after 12 months. Be aware, if you redeem the bond within the first five years, you will forfeit the last three months of interest.

How much can I purchase a Series EE Bond for?

As of 2021, EE bonds can be purchased in amounts of $25 or more, to the penny, up to a maximum purchase amount of $10,000 each calendar year.

Where can I buy a Series EE Bond?

Series EE bonds are only available for purchase online through the TreasuryDirect website.

Is there any tax advantage to Series EE Bonds?

Yes, Series EE Bonds offer tax advantages. The interest earned is free from state and local income taxes. Furthermore, federal tax doesn’t apply until the bond is redeemed or stops earning interest at maturity.

Are Series EE Bonds a good investment?

Series EE Bonds are considered a safe and secure, low-risk investment. They are backed by the U.S. government, which guarantees the initial investment and interest earned. However, the rate of return may be lower than other types of investments.

Can I buy a Series EE Bond as a gift?

Yes, Series EE Bonds can be purchased as a gift for someone else. The bond can be delivered to the recipient’s TreasuryDirect account.

Related Finance Terms

  • Face Value: The price of a bond when it was initially issued, which is the amount the bondholder will receive upon maturity.
  • Interest Rate: The rate at which the investment in the bond increases each year.
  • Maturity Date: The specific date in the future when the investor will receive the face value of the bond.
  • Patriot Bond: A savings bond, issued by the U.S. government, particularly used to finance military efforts.
  • Accrual Bond: A type of bond that doesn’t pay periodic interest but rather includes the interest in the final payout at maturity.

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