Savings Bond Alert #003

New analysis shows converting to series HH bonds is a bad idea for almost everyone

Based on the questions we receive from our readers, we can tell that there's a great deal of confusion about the Treasury's decision to stop issuing Series HH Savings Bonds at the end of August.

Some HH bond owners think they will have to cash in their existing HH bonds. This is false - and also a bad move for those holding older HH bonds that are paying 4%.

Existing HH bonds will continue paying interest until they reach final maturity - there will be HH bonds outstanding for the next 20 years. There just won't be any new ones after the end of August.

Some Series EE bond owners think they are being required to convert their EE bonds to Series HH. This is also false.

In order to help our readers make a knowledgeable decision about whether to convert to Series HH or not, we recently completed a Series HH conversion analysis.

The full analysis is included in the Is tax-deferral better than higher rates? chapter of my book, but in a nutshell it shows that most people would be better off keeping the Savings Bonds they have than converting to 1.5% Series HH bonds. There are a few exceptions, which I go into in the analysis.