7681 / How is the interest on United States Savings Bonds Series E or EE calculated?

The Treasury Department has announced that Series EE savings bonds issued on and after May 1, 2005, will earn fixed, instead of variable, rates of interest in the first 20 years after issue.  The bonds will then continue to earn interest at their original fixed rate for an additional ten years unless new terms and conditions are released before the final ten-year period begins.¹ Previously, a new variable rate was announced each May 1 and November 1, and applied to bonds during the first semiannual rate period beginning on or after the effective date of the rate. Consequently, a Series EE bond purchased prior to May 1, 2005, earned a new rate of interest every six months. However, a Series EE bond purchased on or after May 1, 2005, will have one rate of interest that will continue for the life of the bond (although a different rate or method of determining the rate may be used for any extended maturity period).

The interest rate for a Series EE bond issued on or after May 1, 2005, will be a fixed rate of interest as determined by the Secretary of the Treasury and announced each May 1 and November 1. The most recently announced fixed rate will apply to Series EE bonds purchased during the six months following the announcement (or for any other period of time announced by the Secretary). The fixed rate will be established for the life of the bond, including the extended maturity period, unless the Secretary announces a different fixed rate or amends the terms and conditions prior to the beginning of the extended maturity period. All other Series EE terms and conditions remain unchanged. These changes do not affect bonds that were purchased before May 1, 2005.²