Reading Paper Savings Bonds and Other Bond Certificates
Paper savings bonds and other paper bond certificates may seem like old-fashioned investments, but many people still hold them due to a lifetime of prudent investing or because they received them from family and friends as birthday or holiday gifts.
It's important to know how to read savings bond certificates so you can interpret the information on them. It's also important to learn how to read paper corporate bonds and other types of bonds if you hold any of those, especially if you find yourself inheriting physical bonds that are still outstanding due to their long duration.
U.S. Savings Bonds
Almost all U.S. savings bonds issued these days are in electronic form because financial institutions stopped selling paper bonds in 2012. It's still possible to obtain paper bonds, however: you can buy them through the Internal Revenue Service using your income tax refund. And some people still hold bonds they purchased years ago.
Reading a paper U.S. savings bond is easy:
- The bond will indicate its series in the top right. The different series of bonds—E, EE, and I—each have their own rules, interest rates and features.
- The number in the top left is the face value. The purchaser will have paid half of that amount for the paper bond. And when the bond is redeemed, it may be worth more than that amount, depending on how long it has accrued interest.
- The bond's issue date will be printed on the top right below the series designation. The print date will appear below that.
- The purchaser's name and address will be printed in the center left of the bond. The co-owner's name is printed below that.
- The bond's serial number appears on the bottom right of the bond.
The U.S. Treasury Department currently issues only series EE and I bonds, and I bonds are the only ones available in paper form. Bonds may be redeemed, or cashed in, after 12 months, but you must hold on to them for at least five years if you want to avoid forfeiting the last three months of interest.
EE bonds are currently designed to double the purchaser's investment in no more than 20 years.
Corporate and Other Bonds
Businesses frequently issue bonds to raise money. State and local governments and other government entities also issue bonds to fund various projects.
If you own them in paper form, these bonds may differ significantly from each other, but all will contain some basic information about the bond issuer, the investment itself, and the bond's purchaser. Here's what to look for:
- The bond certificate will show an amount in U.S. dollars if the bond is issued in the United States and in foreign currency if it's issued somewhere else.
- The certificate also will show a bond number or a serial number that is unique to that bond.
- The issuer's name will appear, usually on the top of the certificate. The bond may also indicate the reason why the issuer is selling bonds and may indicate the interest rate or the terms of the investment.
- The bond will show the bond purchaser's name. This may be printed on the certificate or written into a blank space.
Some short-term corporate debt securities with maturities of less than 270 days are referred to as "commercial paper," but this is largely the domain of institutional investors. With the exception of commercial paper held indirectly through money market mutual funds or other comparable cash equivalents, it's unlikely you'll ever invest in commercial paper yourself given the demonstrably superior alternatives, such as short-term certificates of deposit or even savings accounts.
TreasuryDirect. "Treasury to End Over-the-Counter Sales of Paper U.S. Savings Bonds; Action Will Save $70 Million Over First Five Years." Accessed Nov. 19, 2020.
TreasuryDirect. "Using Your Income Tax Refund to Buy Paper Savings Bonds." Accessed Nov. 19, 2020.
TreasuryDirect. "Interest Rates and Terms for Series EE Savings Bonds." Accessed Nov. 19, 2020.
TreasuryDirect. "Comparing Series EE and Series I Savings Bonds." Accessed Nov. 19, 2020.
TreasuryDirect. "May 2005 and Later (EE Bond Rates and Terms)." Accessed Nov. 19, 2020.
Corporate Finance Institute. "Commercial Paper." Accessed Nov. 19, 2020.