Be sure to get out the calendar before you cash savings bonds; Dollars & Sense


I'm interested in knowing when it is best to cash in savings bonds. I know if a bond is issued in January, then the best day to cash it in would be January or July. Well, is it the first day of that month, or do you need to wait for the issue date?

-- P. M., Hope, R.I.

"The rule of thumb is, if you're going to cash in a bond, cash it in early in the month. If you're going to buy a bond, buy it later in the month," said Daniel J. Pederson, president of the Savings Bond Informer, a Detroit company that calculates bond values and sells other services to bondholders.

Why? The government credits bonds with interest on the first business day of a month. So, that's the best time to cash a bond. After all, why delay until later in a month, especially if you intend to put the money to work elsewhere? (On the flip side, why buy bonds at the start of a month, especially if your money is working for you elsewhere? Best to buy bonds toward the end of a month.)

Just make sure you're cashing in your bonds in the right month. For example, most Series EE bonds are credited with interest -- and increase in value -- every six months from the date they were issued. So, a bond issued in March or September will be credited with interest the first business day of every March and September.

This every-six-months rule applies to Series EE bonds issued before March 1993 and EE bonds issued from May 1995 through April 1997.

However, EE bonds issued in March 1993 through April 1995 increase in value monthly the first five years from date of issue and semiannually after that.

EE bonds issued in May 1997 or later increase in value every month, but you forfeit three months' interest if you cash them in before they're 5 years old. (Series I bonds are credited with interest monthly. The schedule for Series E bonds is trickier; ask the savings bond program for details. To find out how, read "Today's Tip" below.)

Remember to find the issue date for your bond by reading the upper right corner of your bond. Focus only on the issue date; ignore the "stamp" date, which has to do with processing, Pederson said.)

We have approximately $8,000 now in EE bonds, and both my husband and I are on the bonds. If, when one of us passes away, and there is no beneficiary left after that -- because they're the only one left -- is there any way those bonds can be kept that way, and another beneficiary put on them, like a son or grandson or something like that? We do have wills, but we hear that it is a terrible situation to try to cash bonds when there is no other beneficiary left on the bond.

-- A. R., Johnston, R.I.

If a husband and wife are listed as co-owners of a savings bond, and one dies, the surviving spouse has the right to add someone's name to the bond, either as co-owner or beneficiary, Pederson said. This could help avoid any snags after the second spouse dies, he said.

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