I won a Savings Bond! Now what?

My daughter won a $100 savings bond in November 1996 through her school. The bond itself says interest ceases 30 years from issue date. This is the first savings bond I have had any dealings with. People have told me many things and I have had this in a fire box all these years. Do I need to do anything before the 30 year interest is up? Do we cash it in at that time?

Tom’s response

The reason that Savings Bonds are frequently used as prizes is that they appear to be worth twice what they’re actually worth. Your daughter’s $100 Saving Bond cost the organization that gave it to her $50. Since 11/96 it’s been earning interest on that $50.

Although you can hold it for 30 years if you want, there’s no reason to do so. Your daughter can cash it whenever she likes and enjoy the fruits of her winnings.

If she’s a saver, not a spender, the bond is currently earning more than the money would earn in a savings account.

The interest rate changes every six months, so it’s not possible to say what the bond will be worth after 30 years. However, it’s guaranteed to be worth at least $100 (its face value) after 17 years, which would be November 2013.

Savings Bonds won as prizes are often lost or forgotten. My advice to your daughter would be to take it to a bank, cash it in, and celebrate her victory from nine years ago.