Needing some cash for our daughter’s first college term, my wife and I looked to an obvious source: the U.S. savings bonds bought faithfully by her grandparents. At the bank, however, I was surprised to find that one $1,000 bond still hadn’t reached its face value after 13 years. In fact, it was still worth less than $900. Since bonds show the month and year purchased but not the date they attain face value, I had been confused about our bond’s redeemable amount.

I’m hardly alone. Millions of bondholders may be uncertain about what they own and its current worth. In some cases, like mine, the bonds have not yet reached maturity. In others the bonds have matured and are sitting in drawers, gaining no further interest.

Unredeemed bonds account for more than $15 billion, says Daniel Pederson, of the Savings Bond Informer, a bond consulting service. “The government doesn’t send out any notice telling people when their interest has stopped,” Pederson  says. The number one age group holding matured bonds, he adds, are people age 50 and up.

Yet when properly used and monitored, U.S. government savings bonds can be a meaningful investment for retirement, college planning or baby gifts—just as they were regarded when originally conceived in 1935. Karin McKerahan, a certified financial planner in Temecula, Calif., says that even though savings bonds may not pay top interest, they remain just about the safest investment you can make because they are backed by the U.S. government. “That’s a big peace-of-mind factor,” McKerahan says.

Still, it’s easy to be confused over what savings bonds are worth and how to maximize their value. Here are some ways to sort things out:

Learn a new savings bond alphabet. Today there’s a difference in purchase price and interest calculation between (1) Series E paper bonds, familiar since the 1940s, (2) the Series EE bonds introduced in 1980 and (3) the Series I bonds added in 1998.

The EE bonds replaced the old Series E bonds. On paper—literally—they function the same way. You buy a paper bond at half its face value (say, $50 for a $100 bond) and it’s currently guaranteed to reach face value in 20 years (older EE bonds have a face-value guarantee that ranges from eight to 20 years, depending on when they were bought). But, since 2001, it’s been possible to avoid paper bonds and buy electronic EE bonds instead. You buy them online, but you pay full face value. The EE bond pays 3 percent and is guaranteed to double in value over 20 years—if it doesn’t, the U.S. Treasury makes up the difference.

The I Series bonds are different—and currently a better value than both E and EE. I bonds are available in paper and electronic versions, both of which cost full face value at purchase. The benefit of I bonds is that they pay a fixed interest rate plus an adjustable inflation factor. In winter 2008, the I bond was paying 4.28 percent interest.

Check your bond’s value online. You can easily check any government bond’s current value on the U.S. Treasury website. Scroll down to the savings bond calculator. You’ll need each bond’s serial number.

Once you know the value, you may find that holding some of them until maturity doesn’t make sense. You may want to redeem them if you’re looking for cash or a better yield.

Cash in at just the right time. You can’t redeem a savings bond until a year after purchase. And if you cash it in before five years, you forfeit the last three months of interest.

For bonds issued before May 1997, interest is credited every six months on the first day of the eligible month. You can lose a lot by redeeming them just before that day. Pederson estimates that Americans forfeit $150 million annually by cashing in bonds at the wrong time. You can find the crucial date on the website by checking the issue date on your paper bond’s upper right-hand corner.

Maximize your tax savings. U.S. government bonds are exempt from state and local income taxes. They can also help you save on federal taxes, depending on your tax situation.

“Used properly, they can be a major boon in tax planning because you have a choice: Pay taxes on your bonds every year or just pay federal taxes when you redeem them,” says McKerahan. One strategy that financial experts suggest is having children declare bond interest every year while their income is very low.

In some cases, parents can get a federal tax break if they use savings bonds for a child’s college or vocational education. The bonds must be in a parent’s name and there are income limits. Consult your tax adviser for details on any strategy.

Enjoy bonding. Whether Series I or EE, bought online or at the bank, bonds give some extra benefits too: They can teach children about savings, brighten a young couple’s future or provide a long-lasting emotional connection. Adults often come up to Pederson at his seminars, clutching bonds from their uncles or grandparents. “It’s a piece of paper that’s a connection to the giver,” he says.