How Series H and Series HH Savings Bond interest rates work
Friday, March 10th, 2006
Categorized as: Series HH or H US Savings Bonds • Savings Bond interest rates
Both Series H and Series HH Savings Bonds have 10-year maturity periods. This means that the Treasury has the right to change the interest rate on your H/HH bonds every 10 years, beginning from the month in which they were issued.
Series H bonds earn interest for 30 years. Those issued in this month in 1976 or earlier have stopped earning interest. The rest are currently in their final rate period and are earning 4.00%.
Series HH bonds earn interest for 20 years. Those issued in this month in 1986 or earlier have stopped earning interest. Some of the rest of these are paying 4.00%, but when they reach their 10th anniversary, the Treasury is lowering their rate to 1.50%. To see what your HH bonds are paying this month, use my Savings Bond Calculator.
If you own Series HH bonds, you'll profit from a weekend reading Savings Bond Advisor, which includes a long section showing you how to compare the benefits of keeping 1.5% HH bonds with redeeming them, paying the income tax, and reinvesting elsewhere.
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My mother has H series bonds and wanted to know why they paid so little this year compared to all other years. Do you have an explanation? Thanks, Joyce
Joyce - as explained in the article on this page, when HH bonds reach their 10th anniversary, the Treasury - which has the right to change the interest rate at that point - is dropping the interest rate they pay from 4% to 1.5%. That's a lot less and explains why your mother's income is down.
1.5% HH bonds are a bad deal for most investors. My book has all the details.