1. What is the US Savings Bond Redemption Calculator?

The US Savings Bond Redemption Calculator calculates the current value of US savings bonds, accounting for semi-annual compounding interest and any applicable early redemption penalties. It helps bond holders determine how much their investment is worth at any given time.

2. How Does the Calculator Work?

The calculator uses the redemption value formula:

Where:

• \( P \) — Purchase amount (USD)
• \( rate \) — Annual interest rate (decimal)
• \( y \) — Years held
• \( Penalty \) — Early redemption penalty (decimal, 0 if no penalty)

Explanation: The formula calculates compound interest with semi-annual compounding and applies a penalty for early redemption if applicable.

3. Importance of Redemption Value Calculation

Details: Knowing the current redemption value is essential for financial planning, tax purposes, and making informed decisions about when to cash in savings bonds.

4. Using the Calculator

Tips: Enter the original purchase amount, annual interest rate (as a decimal), number of years held, and any applicable penalty (enter 0 if no penalty applies).

5. Frequently Asked Questions (FAQ)

Q1: What types of US savings bonds does this calculator work for?
A: This calculator works for Series EE and Series I savings bonds, which use semi-annual compounding.

Q2: When is the early redemption penalty applied?
A: For most savings bonds, a penalty of 3 months' interest applies if redeemed within the first 5 years.

Q3: How do I find the current interest rate for my bond?
A: Current rates are published by the Treasury Department and can be found on TreasuryDirect.gov.

Q4: Are savings bond earnings taxable?
A: Yes, interest earned on savings bonds is subject to federal income tax, but exempt from state and local taxes.

Q5: What's the minimum holding period for savings bonds?
A: Savings bonds must be held for at least 1 year before they can be redeemed.