How to Calculate Interest on EE Savings Bonds

Chances are good you’ve received a Series EE savings bond as a gift at some time or bought one yourself. Any US citizen, legal resident or employee of the U.S. government can buy EE bonds in amounts of $25 to $10,000 each year, according to Treasury Direct. Interest is added each month and compounded semiannually (twice a year). The interest rate is based on when you purchased the savings bond. Treasury Direct provides complete rate tables online.

Locate the date the bond was issued (purchased). If you have a paper EE bond, the date will be stated on the bond. If you have an electronic Series EE bond, log on to your Treasury Direct account. Your bond holdings and information are listed in your account.

Go to the Series EE/E Savings Bond Rates page at TreasuryDirect.gov and find the correct rate table, based on the bond’s date of issue. EE bonds issued as of May 2005 or later pay a fixed rate determined at the time of purchases. Bonds dated May 1997 through April 2005 have variable rates. If the bond was issued from May 1995 to April 1997, it paid a short-term variable rate for the first five years, and then a long-term variable rate thereafter. Series EE bonds issued before May 1995 pay a variable rate.

Determine the bond's initial value (the price paid to buy the bond). Electronic EE bonds are sold at face value. Paper EE bonds are sold at 50 percent face value. Calculate the interest for the first six months. Divide the annual interest rate (from the Treasury Direct rate table) in half and multiply by the original value. Add the result to the bond’s original value. For example, the interest rate for May to October 2007 was 3.40 percent. Divide by 2 to find the semiannual rate of 1.70 percent. If the bond’s original value was $100, multiply $100 times 1.70 percent. Add the interest earned of $1.70 to $100 to find the bond’s value at the end of the first six months.

Many people buy Series EE bonds in months other than May or November, which are the months interest rates are set for the following six months. To adjust the interest earned to take this into account, divide the interest earned for the initial six month period by six and multiply by the number of months you owned the bond. Add this amount instead of the interest for the entire period to the original purchase price. You will have to do this only for the initial six month period.

Continue using the original interest rate for Series EE bonds purchased after April 2005. These rates are fixed, meaning the rate stays the same for the life of the bond. Figure the interest for each six months by multiplying the semiannual rate by the value of the bond at the end of the previous six month period. Then add the interest earned to the bond to find the value at the end of the current period.

Calculate interest for Series EE bonds purchased before May 2005. You calculate interest rate the same way. However, the rate changes every May and November because these are variable rates. Refer to the rate tables for the annual rate in effect for the six month period for which you are calculating interest. Don’t forget to divide the annual rate in half to convert to the semiannual rate.