Series HH Savings Bonds To Earn 1.5% Beginning January 1, 2003

FOR IMMEDIATE RELEASE

December 23, 2002

The Bureau of the Public Debt today announced that Series HH savings bonds issued on and after January 1, 2003, will earn 1.5 percent interest for their initial 10-year maturity period. The new rate replaces the 4.0 percent rate that has been in effect since March 1, 1993. The change is being made to better align the effective return on savings bonds with Treasury marketable security yields.

The 1.5 percent rate also applies to older HH bonds that enter into an extended maturity period on or after January 1, 2003. If Series HH bonds with issue dates prior to January 1, 2003, are less than 10 years old on that date, they retain their current interest rates until the end of their 10-year initial maturity period. If the bonds entered their 10-year extended maturity periods before January 1, 2003, they retain their current interest rates until final maturity (20 years after date of issue) when they stop earning interest.

HH bonds are current-income securities issued only in exchange for Series E or EE bonds with current redemption values totaling at least $500 at the time of exchange. HH bonds are issued in denominations of $500, $1,000, $5,000 and $10,000. Interest is paid semiannually to an owner-designated account at a commercial bank or savings institution. To be eligible for exchange, E and EE bonds must be at least six months old but not more than one year past final maturity.

More information on the terms and conditions applying to savings bonds can be found at here. New rate FAQs can be found on our Series HH/H savings bonds webpage here.