What Is Series E Bond?

A comprehensive entry on Series E Bonds, savings bonds issued by the U.S. Government from 1941 to 1979, including their features, issuance, interest accrual, and redemption processes.

A Series E Bond is a savings bond that was issued by the U.S. government from 1941 to 1979. These bonds were generally issued at 75 cents per dollar face value and matured at par value after a specified number of years, which fluctuated depending on the prevailing interest rates. Series E Bonds were created to offer a safe, government-backed investment option for Americans, especially useful during and after World War II.

Features of Series E Bonds

Issuance and Maturity

• Issuance:

  • Series E Bonds were sold at 75% of their face value. For example, a bond with a face value of $100 could be purchased for $75.
  • The purchase price would increase over time, reflecting accrued interest until it reached its face value at maturity.

• Maturity:

  • Initially, they had various maturity periods, but these periods depended substantially on contemporary interest rates.
  • The bonds continued to accrue interest for up to 40 years from their issue dates.

Interest Accrual

Interest on Series E Bonds could be reported yearly or upon redemption, allowing for tax deferral benefits. The options are:

• Annual Reporting: Taxpayers could report interest income each year if they chose.
• Deferred Reporting: Alternatively, the entire interest income could be reported in the year the bond was cashed.

Interest accrual ceases 40 years after the issuance, even if the bond was not redeemed by then.

Historical Context

Series E Bonds were first issued in 1941, partly to support the U.S. government’s financial needs during World War II. These bonds appealed to Americans because they represented a patriotic investment in national security. They were replaced by Series EE Bonds in 1980.

Applicability and Use

Investment Strategy

• Safety: These bonds were considered very safe due to being backed by the U.S. government.
• Tax Deferral: Bondholders could defer taxes on the earned interest until the bond was redeemed or matured.
• Patriotic Duty: Particularly during WWII, owning these bonds was seen as an act of patriotism.

Redemption Process

• Series E Bonds could be redeemed at most financial institutions or mailed directly to the Treasury.
• Bondholders needed to present valid identification and sign a request for payment on the back of the bond.

Related Terms

• Series EE Bonds: Successors to Series E Bonds, issued since 1980, with different terms and interest accrual methods.
• Savings Bond: General term for bonds like Series E and EE, which are non-marketable and accumulate interest over time.

FAQs

What were Series E Bonds used for?

Series E Bonds were primarily used to finance the U.S. government’s needs during World War II and were promoted as a safe investment for American citizens.

How was interest on Series E Bonds calculated?

Interest was accrued over time and varied with the prevailing rates at the time of issuance. Interest could be either reported annually or upon redemption.

When did Series E Bonds stop being issued?

The issuance of Series E Bonds stopped in 1979, succeeded by Series EE Bonds in 1980.

References

1. “Savings Bonds - Redemption Tables,” Bureau of the Fiscal Service, U.S. Department of the Treasury.
2. “Historical Series E Bonds,” National Archives, U.S. Government.
3. “Understanding Savings Bonds,” Investopedia.

Summary

Series E Bonds were a widely popular savings instrument issued by the U.S. government from 1941 to 1979. Their features, such as being issued at a discount to face value, tax deferral options, and a long interest accrual period, made them a favored investment for many Americans. They played a significant role in U.S. history, particularly during wartime, and laid the groundwork for subsequent savings bond programs.