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TIPS FOR TELLERS
AND ROND OFFICERS
ABOUT
UNITED STATES SAVINGS BONDS
NEW BONDS ARE THE “ BEST-EVER”
OLD BONDS IMPROVED TOO
• Substantial improvements in the terms of
Series E and H Savings Bonds, effective June
1 , 1959, make it important for the public to
know the features which make both old and
new bonds better than ever. This folder helps
to answer the questions your patrons will ask.

fbe Treasury thanks you for your helpful cooperation in
explaining the new terms to bond owners, new buyers,
end the general public.

M e m b e r 23 , 1959.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

SERIES E
N E W E BON DS W IT H ISSUE D A T E S , JU N E
1959 OR AFTER:
EA RN 3 % % when held to maturity compared to
the former 31/4 % (compounded semiannually.)
M ature in 7 years and 9 months — 1 year and
2 months earlier than the former 8 years and 11
months. The higher interest rate means a shorter
time to maturity.
P ay a higher return for shorter terms of holding.
3 % when held 2 years as against 2 % % before.
31/ 2 % when held 4y2 years as against 3V s%
before.
Sam e d en om in a tion s as b e fo r e — $25, $50,
$100, $200, $500, $1,000, $10,000.
Sam e p rices as before— $18.75 for a $25 b o n d ;
$37.50 for a $50 bond; $75 for a $100 bond; etc.
E xten sion p riv ileg e for 10 additional years o f
holding is provided. Interest rates and other terms
and conditions to be determined as they approach
maturity.
N EW T E R M S apply regardless of what is printed
on the bond if the issue date is June 1959 or
after.
As newly printed bonds become available they
will carry the new terms, but new terms apply
regardless on bonds back to June 1959.
Accurate payment will be assured by the table
of redemption values furnished all paying agents,
on which current redemption values are auto*
matically keyed to the issue date on each bond
sold. Those who have purchased bonds beginning
June 1959, but before the newly printed bonds
are available, may exchange their old bonds for
the new if desired, but they get the benefit of
the new terms regardless.
A L L O U TST A N D IN G E B O N D S W IT H ISSU E
D A T E S P R IO R T O JUNE 1 9 5 9 :
E A R N at least % % more than before from
now to next maturity, with lesser improvement
in yields if redeemed earlier. The improved rates
start with the next full interest period beginning
on or after June 1959. There is no retroactive
increase in interest rates for periods prior to
June 1959.
T E R M to m atu rity or extended maturity is un­
changed. The higher rate for the remaining time
means an increase in the new as against the
former redemption values.

F o r sh orter p e rio d s o f h o ld in g during
extension, earning rates will begin at approxi­
mately 31/2% for the first V2 year of holding
and increase uniformly to 3 % % at maturity.
R e d e m p tio n value of a bond at the begin­
ning of the new extension will be the base on
which interest will accrue during the 10-year
extension period.
5.

O T H E R E X T E N SIO N PR IV IL E G E S
(a) Bonds with issue dates of May 1957 and
after (including the new bonds) will have
a 10-year extension privilege, with inter­
est rates and other terms and conditions to
be determined as they approach maturity.
(b ) Bonds with issue dates of May 1941 through
May 1949 (already in their first extension
period prior to June 1959, reaching ex­
tended maturity beginning May 1961) will
have a second 10-year extension privilege.
Interest rates and other terms and condi­
tions will be determined as they approach
their present extended maturity.
In addition to the tax advantage in continued
holding of old bonds, by allowing the tax money
to earn more interest, there is also an advantage
in deferring the tax for people who expect to be
in a lower tax bracket when they redeem their
bonds after retirement.

SERIES H
( S e rie s H b o n d s p a y In te re s t b y check e v e ry six m o n th s)

N E W H BON DS W IT H ISSUE D A T E S O F
JUNE 1 9 5 9 O R A F T E R have also b een
im p rov ed .
E A R N 3 % % the same as E bonds when held to
maturity.
M ature in 10 years as before.
P ay a higher return for shorter terms of holding.

314 % when held 3 years as against former 3 % .
3 % % when held 5 years as against former 3% % .
S a m e d e n o m i n a t i o n s as before — $500,
$1,000, $5,000, $10,000.
P r ice as well as redemption value at all times
(including maturity) is p a r as before.
H igh cu rren t in co m e . Interest checks after
the first three will be level, providing 4 % current
income after IV 2 years of holding.

values ranging from $134.52 to $135.32 vs.
old $133.33).
E x a m p le: Former 3% (extension) bond
dated December 1943
Investment yield from now on (as o f June 1, 1959)

If held for:

Formerly

1 more year . . . 3.04%
3 more years . . . 3.00
44/2 more years . . 3.04
(extended maturity)

Now
3.14%
3.34
3.54

C on tin u in g to h o ld m a tu red b o n d s .
It is m o r e advantageous to hold all former
2.9% (extension) bonds to extended maturity
than to cash now and huy new bonds— (b )
above.
It is also m o r e advantageous in m ost cases
to continue to hold former 3 % (extension)
bonds— (a) above. All of these bonds earn
3 % % or slightly more on their current redemp­
tion value if held to extended maturity. Many
will reach extended maturity before the new
bonds (dated June 1959 or after) earn 314%
(at 41/2 years). However, even if the new bond
does catch up, the difference in practically all
cases is negligible.
In addition, for income tax purposes, most peo­
ple treat the total interest earned since issue
date, as income for the year in which the bonds
are redeemed. They prefer this to paying a tax
each year as interest accrues. The interest on
matured bonds amounts to 25 percent or more
of their total value and even at the lowest income
tax rate the tax payable upon redemption mounts
up. However, continuing to hold these bonds
means that this tax money stays invested and
earns more interest. Therefore, in most cases
there is no gain at all from redeeming the old
bonds to buy new ones.
4.

IM P R O V E D E X T E N S IO N on bonds with
issue dates of June 1949 through April 1957
(reaching maturity June 1959 and after) on
which a 3 % extension had already heen prom­
ised.
E arn 3 % % for the entire extension if held
to extended maturity (new extended maturity
values ranging from $145.00 to $150.20 vs. old
$134.68).
E xten sion p e r io d is 10 years, the same as
before.

Here is how the improved rates to the next
maturity will apply. The improvement depends on
the former rates on these bonds for holding to ma­
turity or for the full extension.
1.

U N M A T U R E D B O N D S reaching original
maturity beginning December 1959 (dated De­
cember 1949 through May 1959).
(a) % % more on form er
bonds
with issue dates of February 1957 through
May 1959 (new maturity values ranging
from $103.20 to $104.24 vs. old $100.00).
(h) % % more on form er 3 % bonds with
issue dates o f May 1952 through January
1957 (new maturity values ranging from
$101.08 to $103.60 vs. old $100.00).
(c ) 6 / 1 0 % more on form er 2 .9 % bonds
with issue dates of December 1949 through
April 1952 (new maturity values ranging
from $100.32 to $101.48 vs. old $100.00).
Example: Former 3% bond dated June
1955
Investment yield from now on (as o f June 1, 1969)

I f held for:
1 more year .
3 more years .
5 % more years
(maturity)

Formerly
. . 3.38%
. . 3.27
. . 3.49

Now
3.47%
3.52
3.99

Continuing to hold unmatured bonds. In
all cases it is more advantageous to hold
these bonds to original maturity and beyond to
extended maturity (see description of improved
extension below) than to cash them in to buy
new ones.
2. BON DS M A T U R IN G , (reaching original ma­
turity June to November 1959) dated June to
November 1949 (see description of improved
extension below ).
3. M A T U R E D B O N D S which reached original
maturity before June 1959 (dated May 1941
through May 1949).
(a)

% more on form er 3 % ( extension)
bonds with issue dates of May 1942 through
May 1949 (new extended maturity values
ranging from $136.36 to $141.12 vs. old
$134,68).

(b) 6 / 1 0 % m o re on f o r m e r 2 .9 % (exten­
s io n ) b o n d s with issue dates of May 1941
through April 1942 (new extended maturity

A LL O U TSTA N D IN G H B O N D S W IT H ISSU E
D A T E S P R IO R T O JUNE 1 9 5 9 :
EA RN Y2, % more than before from now on to
maturity, with lesser improvement in yields
if redeemed earlier. The im proved rates
start with the next full interest period begin­
ning on or after June 1959.
T E R M to m aturity is unchanged. The higher
rate means an increase in the amounts of the
remaining interest checks over the former
scheduled amounts of checks to provide the
y->% increase in yield if the bond is held
to maturity.
Example: Former 3 % bond dated June 1955
Amounts o f remaining semiannual checks (after
June 1, 1969 for $1,000 bond)

Checks

Formerly

Now

First 3 checks . . . $17.00
$17.50
Next 4 checks . . . 17.00
19.10
Last 5 checks
. . . 17.00
21.00
Continuing to hold outstanding bonds to
maturity is more advantageous in all cases
than cashing them in to buy new ones.

OTHER SERIES
Holders of matured and maturing Series F and
G bonds, other than commercial banks, may apply the
redemption proceeds to the purchase of new Series
E or Series H bonds without regard to limit on hold­
ings (see below ).

LIMIT ON HOLDINGS
Investors in Series E and H bonds, other than
commercial banks, may purchase and hold $10,000
face amount (original maturity) of each series in
each calendar year.
In conversations with bond holders or prospective
buyers, they can be assured that Savings Bonds are
sound investments for many other reasons besides
their attractive interest return.
Their most outstanding features are:
Indestructibility — the Treasury will replace any
bonds that are lost, stolen, mutilated, or de­
stroyed.
Guaranteed rate of return over a period of years.
Guaranteed redemption values — not subject to
the risks of market fluctuations.
Can be cashed anywhere in the country.
Backed by the full faith and credit of the United
States.