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Be mindful of your bonds
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April 21, 1997: 12:35 p.m. ET
Complex rules can be confusing to those who own U.S. Savings Bonds
From Correspondent Katharine Barrett
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NEW YORK (CNNfn) - For years, chiropractor Wayne Poller has purchased U.S. savings bonds.
Like many people, he thought he had to cash them in when they reached face value.
"I went to the local community bank and requested to know what the bond was worth at a particular time," Poller said. "They had this chart they went by. However, the chart was not accurate." (137K WAV) or (137K AIFF)
Though savings bonds may look alike, their maturities and interest rates vary greatly according to their series and date of purchase.
Daniel Pederson, a former Federal Reserve employee and author of U.S. Savings Bonds, A Guide, says it's not only bank tellers who are misinformed, but bond owners as well.
"It's the only investment product we have for which we've never received a statement," Pederson said. "So it sat in our dresser drawer or safe deposit box, and we typically have no idea what interest rates our bonds are paying, or if they're still paying interest."
Some key points to remember if you have savings bonds include:
- Make sure to cash in bonds that have reached their final maturity. Americans now hold more than $4 billion in savings bonds that have stopped earning interest.
- Be selective about cashing in bonds. Older bonds can pay a higher interest rate than newer bonds.
- Almost all bonds increase in value twice a year. Find out the dates that apply to your bond before cashing in, or risk forfeiting up to six months of interest.
To get information about your bonds, you can contact a Federal Reserve bank. Private services are also available. For a fee of up to $69, for example, Pederson's "Savings Bond Informer" will provide a customized analysis of your bond holdings.
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