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The Savings Bonds
Question and Answer Book

1. What is a U.S. Savings Bond?

A Series EE Savings Bond is a contract evidencing a loan made to the United States, which promises to repay it, with accrued interest, when the bond is redeemed. On a Series HH Bond, the Treasury makes semiannual interest payments to owners throughout the life of the bond. Bonds are safe and secure because they are backed by the full faith and credit of the United States.

2. What kinds of savings bonds are currently available?

Series EE and Series HH Bonds.

3. What is a Series EE Bond?

The Series EE Bond is an appreciation-type security that is issued for terms totaling 30 years. This means that its value increases as interest is added to the principal. Both principal and interest are paid in a lump sum when the bond is redeemed. EE Bonds are available in a wide range of denominations. The purchase price of a Series EE Bond is one-half the face value; for example, a $100 bond costs $50. Interests rates on savings bonds vary depending on when a bond is purchased and how long it is held. A bond's face value is reached based on its actual yield over time. If bonds earn an average of 4% per annum, compounded semiannually, the face value will be reached in 18 years; at 6%, 12 years. Savings bonds rates, where subject to marketable Treasury securities rates, are announced each May 1 and November 1. (Treasury marketable securities are United States obligations, such as Treasury Bills, Notes and Bonds, which may be bought and sold in the market.) Series EE Bonds can be purchased through most commercial banks, many savings institutions, and the payroll savings plan offered by thousands of employers.

4. What is a Series HH Bond?

Series HH Bonds are current-income securities issued for terms totaling 20 years, consisting of a 10-year original maturity period and a ten-year extension. HH Bonds are issued only in exchange for accrual bonds (Series E Bonds, Series EE Bonds and Savings Notes) with redemption values totaling $500 or more. HH Bonds are issued and redeemed at face value and pay interest to investors semi-annually at a fixed rate set at the time of purchase. Rates are subject to change after 10 years. Interest is paid by direct deposit by the Treasury Department. HH Bond denominations range from $500 to $10,000.

5. How can I find out which interest rate
applies to my bonds?

The interest rate information you received with this publication will provide you with the terms of the current offering. Charts showing the fixed and variable rates in effect since the introduction of the Series EE and HH Bonds are available from the Savings Bonds Marketing Office, Washington, DC 20226.

6. What about interest rates for older bonds?

Outstanding Series EE and E Bonds and Savings Notes are eligible for market-based rates. The market-based rate is calculated from the beginning of the market-based period, November 1, 1982, or from the issue date if later. (Savings Notes, also known as Freedom Shares, are appreciation-type securities issued between 1967 and 1970.) Series E/EE Bonds and Savings Notes issued before November 1, 1982, retained the guaranteed rate that applied to them on October 31, 1982, to the end of the original or extended maturity period in effect on that date. Bonds or notes in extension periods that began on and after November 1, 1982, are covered by the rate in effect for new Series EE Bonds when they entered the extension. Series H and HH Bonds earn fixed rates. The bonds earn the rate in effect at the time of issue or, if in an extended maturity period, the rate in effect at the beginning of that period. As H and HH Bonds enter new extension periods, they will begin to earn interest at the rate in effect at the time. This new rate will stay in effect for the H or HH Bonds throughout the new extension period. (See question 7 for the interest-bearing lives of savings bonds.)

7. How long do savings bonds and savings notes continue to earn interest?

Bonds continue to draw interest until final maturity. The table below provides information on maturity periods for these securities.

8. What happens if a bond is held beyond
final maturity?

Bonds stop earning interest at final maturity. These bonds should be redeemed or-in the case of Series E/EE Bonds or Savings Notes-exchanged for Series HH Bonds (see questions 31 through 37) at final maturity or within one year thereafter. All interest on appreciation-type bonds, not previously reported, is reportable for Federal income tax purposes in the year the bonds reach final maturity.

9. I have a number of bonds bought in different years. How can I determine their value today?

Free copies of simplified redemption tables for $25 Series E and $50 Series EE Bonds (PD 3600) can be obtained from the Bureau of the Public Debt, Savings Bond Operations Office, Parkersburg, WV 26106-1328. You can buy the Series E and EE Bond redemption booklets, which contain values for all denominations. An annual subscription for each series costs $5.00 from the Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Ask for TRVE for Series E Bonds and TRVEE for Series EE Bonds. Payment may be made by check or money order made out to the Superintendent of Documents; by GPO Deposit account, or by Visa or Master Card account (include card number and expiration date). The price is subject to change.

All outstanding Series E Bonds and Savings Notes that have not reached final maturity are earning market-based rates (or previously-guaranteed rates, if higher).

Purchase of Bonds

10. Where can I buy savings bonds?

Series EE Bonds can be purchased through any local financial institution serving as a savings bonds agent. Agents accept applications and payment for bonds and forward them to a Federal Reserve Bank where the bonds are issued and mailed to the owner. Bonds are delivered within 15 business days, and the bond's issue date reflects the date of application so no interest is lost. Agents stock gift certificates that bond purchasers can use to advise gift recipients that a bond has been ordered. EE Bonds can also be purchased through the Payroll Savings Plan offered by many employers.

HH Bonds are available-through exchange of Series E/EE Bonds and Savings Notes with a total redemption value of at least $500, or with the proceeds of a matured Series H Bond-at Federal

Reserve Banks and Branches or from the Bureau of the Public Debt, Parkersburg, WV 26106-1328. Local banks often will help customers complete and forward exchange applications.

11. Who can buy savings bonds?

Residents of the United States, its territories and possessions, and residents of Puerto Rico; citizens of the United States residing abroad; civilian employees of the United States and members of the armed services (regardless of residence or citizenship if they have a social security number). Residents of Canada and Mexico who work in the United States may also purchase bonds, but only through payroll savings plans.

12. Is there a limit on how many bonds I can buy?

There is no limit on the amount of HH Bonds that may be obtained through exchange of Series E and/or Series EE Bonds and/or Savings Notes or purchased with the proceeds of matured Series H Bonds. There is a limit on the amount of EE Bonds an individual owner may purchase in one calendar year. The current annual limit is listed on the interest rate leaflet you received with this booklet.

13. Are savings bonds registered securities?

Yes. Complete ownership records are maintained by the Treasury Department, allowing bonds to be replaced in case of loss (see question 19) or reissued for a variety of reasons.

14. How can bonds be registered?

A bond may be registered in the name of individuals in their own right in three ways:

• One owner only: Upon death, the bond becomes part of the owner's estate.

• Two persons as coowners: Either may cash the bond without the knowledge or approval of the other. On the death of one owner, the other becomes sole owner of the bond.

• One owner and one beneficiary: The beneficiary, if he or she survives, automatically becomes owner of the bond when the original owner dies.

15. If I want to buy a bond as a gift and don't
know the social security number of the recipient,
what should I do?

Your social security number is placed on the bond, along with the recipient's name and address. However, purchasers of gift bonds are encouraged to obtain the social security number of the registered owner before purchasing the bond. (Also see question 17.)

16. Can a minor (under age 18) buy bonds in his or her own name?

Yes, provided he or she has a social security number, can sign his or her own name, and is of sufficient competency to understand the transaction.

17. Can a parent, other relative, or friend buy a bond for a minor who does not have a social security number?

Yes. To do so, the purchaser is required to provide his or her social security number. (This alone does not incur tax liability.) Such bonds can also be registered in coownership form, providing the purchaser is not one of the coowners. If the purchaser is registered as coowner of such a bond, the purchaser's name will be listed first on the bond, and it will be considered the purchaser's property for tax purposes. IRS regulations require all children aged one and older to have social security numbers. The social security number of the registered owner, minor or adult, should be used whenever possible.

18. Can financial institutions charge customers a fee to issue or redeem bonds?

No. The Treasury Department pays a fee to financial institutions to process purchases and redemptions.

19. If a bond is lost, stolen, or otherwise destroyed, what should I do?

Bonds that are lost, stolen, mutilated or destroyed, can be replaced free of charge as long as it can be established by the Bureau of the Public Debt that the bonds are still outstanding. To assure that bonds can be traced, owners should keep records of bond serial numbers, issue dates (month and year found in the upper right hand corner of a bond), registration (names and addresses) and the social security or taxpayer identification numbers in a safe place separate from the bonds. Bond owners should send details of the loss, along with partially destroyed bonds if burned or mutilated, to the Bureau of the Public Debt, Savings Bond Operations Office (SBOO), Parkersburg, WV 26106- 1328. Filling out the replacement application form PD F 1048 will help speed replacement. These forms are often available from local banks or from the Federal Reserve (see question 45). Replacement bonds bear the original issue date.

A brochure "Record of Ownership" to help you keep track of your bonds by serial number and issue date is available from Public Debt's Savings Bonds Marketing Office.

20. If a woman bought bonds in her maiden name and later marries, must the bonds be reissued in her married name?

No. When she cashes her bonds, she need only sign her maiden and married names on the bond; for example, "Mary L. Smith, changed by marriage to Mary L. Jones.

21. If I move, should the Treasury Department be notified?

No, for E or EE Bond owners. Yes, for owners of Series H or HH Bonds receiving interest checks. Semiannual interest checks are mailed to the owner's current address. Send the new address, along with a complete description of your bonds, to the Bureau of the Public Debt, Savings Bond Operations Office, Parkersburg, WV 26106-1328. The change of address form printed on the back of the interest check envelope should be used, if available. Owners having their interest payments deposited electronically to a designated account should notify the above office only if that account is to be changed.

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