Banking » Investing » How To Cash In U.S Savings Bonds
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How To Cash In U.S Savings Bonds

If you have a paper savings bond, redeem it at your bank or credit union. If you have electronic EE bonds, redeem your bond by TreasuryDirect
Author: Lorraine Smithills
Lorraine Smithills

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Lorraine is a freelance finance writer with years of experience in the banking sector and after a successful career in one of the largest retail and commercial financial services providers. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.
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Author: Lorraine Smithills
Lorraine Smithills

Writer, Contributor

Experience

Lorraine is a freelance finance writer with years of experience in the banking sector and after a successful career in one of the largest retail and commercial financial services providers. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.
Interest Rates Last Update: April 15, 2024

The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.

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Table Of Content

What Is A Savings Bond?

U.S. savings bonds are a type of bond issued and backed by the U.S. government. These are medium to long-term investments considered safe as their value cannot decrease, and the only way you can lose your initial investment is if the government fails.

When you purchase savings bonds, you are lending money to the government. In return for this loan, you’ll be repaid back over time for the bond purchase amount plus interest. Savings bonds can earn interest for up to 30 years, but they have a minimum point of entry, with bonds starting at just $25. 

You can purchase bonds for yourself or as a gift. While paper  bonds are no longer issued at financial institutions, you can buy bonds electronically via the TreasuryDirect government website.

Where Can I Cash a Savings Bond?

Where you can cash in your savings bond will depend on whether it is a paper bond or an electronic one. Most banks and credit unions will allow you to cash a paper savings bond. However, the policies for the cashing in process vary from bank to bank. It is best to approach your own bank, where you hold a checking or savings account first, as some banks impose fees for non customers.

If you have an electronic bond, the cashing process is even simpler. You simply need to sign into your TreasuryDirect account and click to redeem your bond. You’ll need to follow the prompts and once you complete the steps, the cash value of the bond will be credited to your designated checking or savings account.

savings bonds series i and series ee
(Photo by Jonathan Weiss/Shutterstock)

Who Can Cash a Savings Bond?

Savings bonds are tied to specific people via their Social Security Numbers. When you purchase a bond, you’ll need to provide either your own SSN or the details for the recipient of your gift. Only the person linked to the bond will be able to cash it.

This means that if you purchased a bond for someone, only they can cash it in.

How To Cash In Paper Savings Bonds?

If you have a paper savings bond, you should be able to redeem it at your bank or credit union. This ability may depend on how long you’ve held an account with the financial institution.

You will also need to consider that most financial institutions have limits on how much cash you can withdraw without notice. They may also have a limit on the maximum bond redemption dollar amount.

You will need to bring ID and other supporting documentation such as your Social Security Number. However, the specifics will depend on the bank’s policy. So, it is a good idea to contact your bank and check what is needed before you go into the branch.

If you have an older paper bond, your bank or credit union may not be able to cash it for you. In this case, you will need to complete the relevant form and send it with the bond to the Treasury Retail Security Services along with direct deposit instructions.

Your bank or credit union will typically be able to help you work out the required process for redeeming your specific bond.

Series EE bonds have a 30 year full maturity, but you can redeem it after one year. You can cash in paper EE bonds at most banks or credit unions. You can also redeem your bond by mail using TreasuryDirect.

You’ll need to fill in the FS Form 1522 and then mail the form along with your bonds to the provided address. You’ll designate a savings or checking account on the form and funds will be transferred via direct deposit.

You can log into your TreasuryDirect account and follow the redemption instructions if you have electronic EE bonds.

Series E savings bonds were issued up until 1980 in paper form only. Since these bonds have long since been discontinued, even the later bonds reached full maturity in 2010.

Your bank may still offer to cash these bonds, but you may need to use the FS Form 1522 and mail them in via TreasuryDirect as we discussed earlier.

Series I savings bonds were first launched in 1998 and are still available today. They reach final maturity after 30 years, but you can redeem them after one full year.

You can cash in paper I series bonds at your bank or credit union if they offer the service or you can cash them via mail using the TreasuryDirect website and completing the FS Form 1522.

Series I savings bonds are more commonly electronic, which means that you can cash in your bond by logging into your TreasuryDirect account and following the redemption instructions.

Series HH savings bonds were issued from 1980 to 2004 in paper form only. These bonds had a fixed rate for 10 years, with a reset rate for the remaining 10 years. They reached full maturity after 20 years.

Unfortunately, financial institutions cannot cash in HH bonds. You will need to use the mail in redemption system by completing the FS Form 1522 on the TreasuryDirect website.

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There are a number of older series savings bonds such as Patriot bonds or Gulf Coast Recovery Bonds. While these are no longer sold they may have not yet reached maturity. You will need to check the value and maturity date of your bond.

In most cases, old savings bonds cannot be cashed at a bank or credit union. This means that you’ll need to use the mail in redemption process, filling in the FS Form 1522 from the TreasuryDirect website and mailing it along with your bonds to the address provided.

How Much is My Savings Bond Worth?

There are a few factors involved in calculating the value of your savings bond including:

  • The type of savings bond
  • The issue date
  • Whether it was sold as a face value percentage or full face value.

Fortunately, you don’t need to do much-complicated math to determine how much your savings bonds are worth.

If you purchased a bond electronically, you can log into your online account at TreasuryDirect to check the value of your bond. If you have a paper bond, there is a free calculator on the site that helps you get a value for your bond.

You’ll need to enter the type of bond, the issue date and its denomination. You can also include the bond serial number, but this is not needed to obtain a value.

Some examples include:

  • A $50 series EE bond issued in January 1985 is currently worth $115.32 (As of Dec 22)
  • A $100 series I bond issued in October 1998 now has a value of $390.48
  • A $25 series E bond issued in April 1980 is now worth $110.62

You can even get values of even older savings bonds, such as a $75 savings note issued in June 1970, which now has a current value of $416.10. In this case, the bond has reached maturity and will no longer continue accruing interest.

When Should You Cash In a Savings Bond?

After you’ve discovered the value of your bond, you will need to decide if it is a good time to cash it in. There are several factors that you’ll need to consider. These include:

  • The Bond Maturity: You can cash in your bond after a minimum period, which is typically one year. However, this will not allow you to leverage the full potential of your bond. Most savings bonds pay interest for 30 years, at which stage they are considered fully matured. At this stage, the bond is no longer generating interest, so it is a good time to cash it.
  • Face Value: Some bonds are sold at half of their face value. So, if you have a $50 bond, you can purchase it for $25. However, these bonds can only be redeemed for the full face value once a specific period of time has elapsed. You’ll need to check whether you would be eligible to receive the full cash amount that you’re expecting.
  • Interest Penalties: If you’ve only owned your bond for a few years, an interest penalty could be imposed if you want to redeem it. This typically involves forfeiting a few months of interest the bond has accrued. You will need to consider whether you are willing to lose this interest before you make the decision to redeem.
  • Your Reason for Cashing Out: Savings bonds are designed to hold your funds and provide a stable rate of interest over the medium to long term. So, you’ll need to ask yourself why you are thinking about cashing out, particularly if the bond has not yet fully matured. If you need short-term cash, it may be better to explore alternatives, but if you’ve got the chance of getting a higher rate with a high-yield savings account or CD, it could be a good idea to redeem your bond.

Before you finalize your decision to redeem your bond, ensure it is part of your larger plan that is in line with your investment timeline and risk tolerance to ensure it contributes to your overall financial goals.

maximize Savings bonds
(Photo by larry1235/Shutterstock)

Do You Pay Taxes on US Savings Bonds When Cashed?

The interest income you’ve accumulated from your savings bonds will be subject to federal income tax, but local and state income taxes do not apply. Depending on your specific tax situations, your bond interest may be subject to inheritance or estate taxes, excise taxes or federal gift tax.

The interest from your bond can be reported to the IRS each year the interest is accrued, or you can report it all at once when you redeem the bond. You’ll need to consult a tax advisor to decide which reporting is best for you.

There are some circumstances where you may be exempt from paying taxes on your redeemed savings bonds, so it is a good idea to check the Treasury Department guide and speak to your tax advisor to ensure that you fully understand the tax implications.

Can I Cash Savings Bonds Without a Bank Account?

It may be possible to cash your savings bond if you don’t have a bank account. Some banks will allow you to cash savings bonds even if you don’t hold an account. You must show a verifiable picture ID, such as your driver’s license or a state-issued ID. The teller will not know the ID type, issue date, and number.

However, there are some limitations. The maximum redemption amount for non customers is $1,000. So, if your bond has a higher redemption value, it will not be possible to redeem it. However, you can redeem several smaller bonds up to the $1,000 maximum.

How Long Does it Take to Cash Savings Bonds

You can expect the funds in your designated account within two business days if you're redeeming your savings bond via the TreasuryDirect website. Following the redemption instructions on the website should only take a few minutes, but if you don’t already have a TreasuryDirect account, you’ll need to set one up, which will make the process longer.

It should not take a significant amount of time if you’re cashing in your savings bonds at a bank or credit union. The teller will need to verify your ID and obtain a valuation for your bond. Depending on the bank, it may only take a few moments or you may need to wait while the bank officer completes this

FAQs

Yes, many credit unions offer savings bond cashing services. You will need to be a member of the credit union and it is a good idea to check before you visit the branch.

There are a number of banks who allow non customers to cash savings bonds. You’ll need to check the specific banks in your area to check their policy.

If a bank cashes your savings bond, they will provide a 1099. If you redeem your savings bond via TreasuryDirect, a 1099 will be available in your account the following January.

Most banks offer a savings bond cashing in service, but it is best to use a bank where you already hold an account.

Most savings bonds allow you to redeem them after one full year, but if you cash in the first few years, you will not only miss out on interest, but you may incur an early redemption penalty.

If your savings bond was lost, destroyed or stolen, it may be possible for the bond to be reissued. You’ll need to file a claim with the FS Form 1048, but you will need to provide information about the bond including the month and year of purchase.

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Picture of Lorraine Smithills

Lorraine Smithills

Lorraine is a freelance finance writer with years of experience in the banking sector and after a successful career in one of the largest retail and commercial financial services providers. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.
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