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Minimum Holding Period For Savings Bonds Extended To 12 Months


January 15, 2003

The Treasury Department announced today that the minimum holding period that applies to United States Savings Bonds will be extended from six to twelve months, effective with issues dated on and after February 1, 2003. The minimum holding period is the length of time from issue date that a bond must be held before it is eligible for redemption. Both Series EE and I bonds are affected. Series EE and I Savings Bonds bearing issue dates prior to February 2003 retain the six-month minimum holding period in effect when they were issued.

Individual investors who are saving for the longer term will not be affected by the lengthened holding period. The new holding period will prevent purchasers from taking advantage of the current spread between savings bond returns and historically low short-term interest rates by cashing in bonds after six months. Savings Bonds are designed to be a long-term savings vehicle.

All other terms and conditions that apply to Series EE and I bonds remain unchanged. Both series are accrual securities, earning interest and growing in value as they are held, up to a maximum interest-bearing life of 30 years. EE bonds earn market-based interest rates at 90 percent of an average of five-year yields of marketable Treasury securities. I bonds earn a composite rate (a combination of a fixed rate set at purchase for the life of the bond, and an inflation rate that is adjusted semiannually based on the consumer price index for urban consumers). Interest on both series accrues monthly and compounds semiannually. Bonds held less than five years are subject to a three-month interest penalty.

More information about United States Savings Bonds can be found on the website