Interest Accrual

• Series EE bonds with issue dates after April 2005 earn a fixed rate of interest for the life of the bond. Savings bonds with earlier issue dates are paid a variable rate. Interest on EE bonds issued after April 1997 accrues monthly. The monthly rate is the current annual rate for the bond divided by 12. The Treasury tracks all EE bonds by the issue month, and it does not matter which day of the month the bond was purchased, or which day of the month is used to check a bond's value or redeem a bond.
  
  

Compounding

• Series EE bonds compound interest every six months. After six months, the accrued interest from the previous six months is added to the value of the bond used to calculated the monthly interest. The result of compounding is for each six month period, the monthly amount of interest earned will be higher than for the previous six months. Compounding allows the owner of an EE bond to earn interest on the interest as it accumulates in the value of the bond.
  
  

Guaranteed Future Value

• The U.S. Treasury guarantees a paper savings bond will reach its face value no later than 20 years after it is purchased. This is a double in value of the original investment amount and also applies to electronic EE savings bonds. If the rate being paid on a savings bond is not sufficient to double the bonds value in 20 years, the Treasury will make a one-time interest addition on the bond's 20th anniversary to bring the series EE bond up to the guaranteed value.
  
  

Interest Penalties and Earnings

• An EE savings bond cannot be redeemed within the first 12 months after issue. If an EE bond is cashed in the first five years, an interest penalty equal to the most recent three months of accrued interest will be deducted from the bond's value. On the other end of a saving bond's life, a series EE bond will continue to accrue interest until 30 years after it was purchased.