How To Cash In Savings Bonds

Here's what you need to know before redeeming savings bonds.

Now issued electronically rather than on paper, savings bonds take up to 30 years to mature, and they stop earning interest once they reach maturity. No state or local taxes are charged on bond interest, and you can defer federal tax until you redeem, or cash in, the bond or it reaches maturity. Additionally, some bonds used for qualified educational expenses earn you federal tax benefits.

Depending on the type of savings bond you have, you can cash in the bond electronically, by mail or at a financial institution.

Keep reading to find out how to redeem savings bonds and get the most from your investment.

Determine What Kind of Savings Bond You Have

Before determining the best way to redeem your savings bond, it’s a good idea to figure out which type you have. There are currently two types of U.S. savings bonds: Series EE and Series I.

Series EE Savings Bonds

Series EE savings bonds are an appreciation-type savings security. These are sold at face value and are worth the amount on the bond at the time of redemption.

Once the bond is purchased, the interest is then accrued and distributed electronically. EE bonds reach maturity in 30 years and can be purchased in amounts ranging from $25 to $10,000.

Series I Savings Bonds

As with EE bonds, Series I savings bonds are sold at face value, and you can buy them in amounts starting at $25, up to $10,000. You are limited to purchasing up to $10,000 in electronic I bonds and $5,000 in paper I bonds in a calendar year.

These differ from Series EE because they are inflation-indexed, meaning they guarantee a higher rate of return than the rate of inflation if held to maturity in 30 years.

Investing for Everyone

Series I bonds are popular graduation and birthday gifts because they can be taken out in someone’s name, even if they are under 18.

When You Can Redeem Bonds

You can redeem an I bond or EE bond after 12 months — but keep in mind that both types of bonds have an early redemption penalty if redeemed within the first five years of buying them. If you redeem early, you will forfeit the most recent three months’ interest.

To put that in perspective, the I bond rate for a bond purchased between May 1 and Oct. 31 is 1.06% during the first six months you own it, and interest accrues monthly for up to 30 years, according to TreasuryDirect.

How To Cash In Savings Bonds

Follow one of these procedures to cash in your savings bond, depending on its type:

Here’s a closer look at the steps for each bond-redemption method.

Redeeming Paper Bonds in Person

Follow these steps to redeem paper bonds in person:

  1. Gather the unsigned paper bonds you want to cash, any proof of identity your bank requires, and if needed:
    • Proof of your name change — such as a marriage license, divorce papers or a court order — if the name on the savings bond doesn’t match your current one
    • The certified death certificate of the previous owner of the savings bond, if you are a beneficiary
  2. Go to a bank to redeem the bonds. You have a better chance of redeeming bonds at a bank where you have an account.
Investing for Everyone

Typically, you can redeem an unlimited number of bonds at a bank where you have an account. Bond owners who don’t hold an account might still be able to cash in savings bonds, but there could be limits on how many you can redeem.

Paper bonds must be cashed in full; partial redemptions aren’t allowed.

Redeeming Paper Bonds by Mail

Follow these steps to redeem paper bonds by mail:

  1. Fill out FS Form 1522 and sign it before a certifying officer.
  2. Mail the form and bonds to Treasury Retail Securities Services, using the appropriate address provided in the instructions.

Redeeming Electronic Bonds

Follow these steps to redeem electronic bonds:

  1. Visit TreasuryDirect and log in to your account.
  2. Use the link in ManageDirect for redeeming securities.
  3. Redeem at least $25. Leave at least $25 in the TreasuryDirect account if you only redeem a partial amount of a bond’s value.

Watch for the cash to be credited to your checking or savings account, usually within two business days.

This article has been updated with additional reporting since its original publication.

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About the Author

Cynthia Measom

Cynthia Measom is a personal finance writer and editor with over 15 years of collective experience. Her articles have been featured in MSN, AOL, Yahoo Finance, INSIDER, Houston Chronicle and The Seattle Times. She attended the University of Texas at Austin and earned a Bachelor of Arts degree in English.

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