Checking your U.S. savings bond investment

How, you might wonder, are we able to earn a 5.45 percent yield on a U.S. government-backed investment in the current low-rate environment?

It required no amazing skills — other than checking on the current value of a EE U.S. savings bond we received as a wedding gift some 16 years ago. Last we looked, the $100 bond was worth nearly $243, and going strong.

Good thing we never redeemed it!

If you have any of these old U.S. savings bonds lying around, please don't forget about them or lose them. Savings bonds typically earn interest for as long as 30 years. So you could be surprised at what they're worth today.

At www.treasurydirect.gov, you can click on the "savings bond calculator" to figure out what your old U.S. savings bond is worth. You also may convert your paper bond into an electronic bond for safekeeping through the U.S. Treasury's "SmartExchange" program. To do this, you must mail in your bonds, but the terms don't change, assures Bureau of Public Debt spokeswoman Joyce Harris.

You also can download a "savings bond wizard" that auto- matically quotes the specific value of your savings bond based on the issue date and serial number. That's how we learned of our great yield.

Unfortunately, in the last 20 years or so, U.S. savings bonds became tough to figure out, largely because their pricing became very complex. Plus, it keeps changing! Depending upon when you got your bond, your interest rate may be fixed or variable. Various periods may be subject to different interest rates.

Nevertheless, like ours, many old savings bonds have higher interest rates than you can safely earn elsewhere today.

When we first got our savings bond, for example, it had a 6 percent minimum guaranteed interest rate for its 12 year "original maturity period." That rate was compounded semiannually.

Unfortunately, that original maturity period expired in 2004. So Uncle Sam took the opportunity to slash our guaranteed minimum interest rate to 4 percent--apparently along with all other bonds which ended an extended maturity period since March 1993.

"New rules could apply when the bond enters its second extended maturity period December 1, 2014," a Treasury rep warns us.

For now, we'll enjoy our above-market yield, thank you.

Do you happen to have a "Series E" U.S. savings bond?

If so, this could be the last year you'll earn interest. Say you bought a $100 Series E bond near the end of 1979: Last we looked, its value had more than quadrupled--to $433.80, based on the savings bond calculator.

The U.S. Bureau of Public Debt says $16.6 billion of its debt remains unredeemed. Could you be holding some of these bonds that have grown substantially in value, but now earn no interest?

Savings bonds issued from May 1941 through May 1979 already are earning zilch. So it could be time to invest the proceeds.

The quickest way to redeem any U.S. savings bonds is to cash them in at a bank where you have an account.

Are you, like us, kicking yourself for not buying more of these U.S. savings bonds that now yield more than 5 percent?

If so, you're out of luck. Buy a U.S. savings bond today, and expect to earn a paltry .70 percent interest rate. Even worse: After May, 2005, the interest rate became fixed for 30 years. So if interest rates rise, as many believe they will, you're still stuck with that rate.

"Not spectacular," Harris acknowledges, "but you're not losing money."

Spouses Gail Liberman and Alan Lavine are syndicated columnists. Their latest book is "Quick Steps to Financial Stability" (Que/Penguin). You can contact them at www.moneycouple.com.