Q:

How do you calculate interest on U.S. Treasury HH savings bonds?

A:

Quick Answer

Interest is paid on U.S. Treasury HH savings bonds at the rate of 1.5 percent of the value of the bond every six months, reports TreasuryDirect, a service of the U.S. Department of the Treasury. Because HH bonds are a discontinued series, the rate is unlikely to change.

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Full Answer

HH bonds earn interest for a maximum of 20 years, with the first decade calculated at a different rate than the second decade, according to TreasuryDirect. However, because the HH savings bonds series was discontinued in August 2004, all remaining HH bonds are fixed at the second decade interest rate of 1.5 percent. Interest is paid out every six months after the date of purchase. HH savings bonds were issued in four different denominations, and the precise interest every six months for $500 bonds is $3.75. For $1,000 bonds, the six-month interest is $7.50, for $5,000 bonds it is $37.50, and for $10,000 bonds it is $75.00.

The interest on HH series bonds is subject to federal income tax but not state or local taxes, states TreasuryDirect. Because HH bonds were issued in paper form only, they cannot be redeemed online. To redeem HH bonds at their face value, owners must request payment on the bonds with a certified signature, and send the bonds and any supporting documents along with direct deposit details to the Federal Reserve Bank of Minneapolis.

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