Am I thinking this through properly? EE Bonds

Discussion in 'Money Talk$' started by annsni, Aug 28, 2014.

  1. annsni

    annsni
    Expand Collapse
    Administrator
    Administrator

    Joined:
    May 30, 2006
    Messages:
    20,149
    Likes Received:
    365
    My FIL bought my kids EE bonds each year for their birthdays and we have cashed those ones in that have reached the full value but I just looked online and seriously, these things will take FOREVER to reach maturity!! I'm wondering if it's not smarter to cash these ones in even though they are not worth the full amount (but still a little more than he paid for them) and use them to pay off student loans that my kids have. I KNOW the loans have higher interest rates than they would ever earn from these bonds. The value is not huge - about $800 total for the ones we'd cash in but hey, $800 off student loans is $800 off student loans! What do you think?
     
  2. Salty

    Salty
    Expand Collapse
    20,000 Posts Club
    Moderator

    Joined:
    Apr 8, 2003
    Messages:
    22,083
    Likes Received:
    218
  3. annsni

    annsni
    Expand Collapse
    Administrator
    Administrator

    Joined:
    May 30, 2006
    Messages:
    20,149
    Likes Received:
    365
    That's my understanding as well. Nicole just started grad school for her doctorate of audiology and she certainly can use a bit of cash! If she uses it for books, I'd say that is education. Lauren will be going back to grad school soon for her masters in education so she can use it there too. SO I'm thinking cashing it in is the way to go.
     
  4. InTheLight

    InTheLight
    Expand Collapse
    Well-Known Member

    Joined:
    Dec 17, 2010
    Messages:
    16,186
    Likes Received:
    611
    I presume you've been to the Treasury Direct website and found out the face value and interest rate being paid. If you need the cash, cash them in. Unless they are TIPS (inflation adjusted bonds). If so, you might want to hang onto them.
     
  5. rsr

    rsr
    Expand Collapse
    <b> 7,000 posts club</b>
    Administrator

    Joined:
    Dec 11, 2001
    Messages:
    10,073
    Likes Received:
    101
    Yes, you likely would save far more in interest on the student loans than you're likely to get from the bonds, at least for the foreseeable future. Then again, they're paying better than a savings account or a short-term CD, so they're not worthless.

    Unfortunately, you can't claim the tax-free interest to pay for books; tuition and fees are covered, but not books and room and board.
     
  6. annsni

    annsni
    Expand Collapse
    Administrator
    Administrator

    Joined:
    May 30, 2006
    Messages:
    20,149
    Likes Received:
    365
    Actually, if we put the money into Capital One 360 account, we can get right now .75% interest which is better than we're even getting on some of these bonds AND the money is not tied up.

    Fortunately, my second daughter will be able to use it for tuition and my oldest will be able to use it for grad school next year when she goes (so she won't cash them in yet). But really, the amount of interest earned is under $100 total on the bonds.
     

Share This Page

Loading...