How to Cash in a Savings Bonds

Cash savings bonds are long-term investments that are issued by the government, and that can be redeemed for cash. When you were younger, you may have received savings bonds from your grandparents or a relative. Now that you’re older, the bonds have matured, and you’re finally ready to redeem them to pay for an expense or reinvest the money.

However, you may be uncertain about how cashing savings bonds works and what their value is. Find out about how to cash in a bond and how much bonds are worth.

What Are Savings Bonds?

Savings bonds are long-term, low-risk investments that are a debt instrument of the United States government. Created during World War II, they initially allowed citizens to help fund the U.S. government during the war, and were formerly called Series E War Savings Bonds. (Nowadays, there are different types of bonds, as outlined below.) Since these bonds are guaranteed by the U.S. government, they are generally considered among the safest investments out there.

Types of Savings Bonds

There is more than one type of savings bond: There are EE and I bonds.

EE bonds have fixed interest rates which remain the same for at least 20 years. The government guarantees that the bond’s value will double after 20 years, too. I bonds have variable interest rates that change every six months, and part of those changes depend on the rate of inflation. The government also guarantees that the interest rate will never fall below zero.

Both types of bonds are sold for face value.

How Savings Bonds Generate Interest

Savings bonds generate interest through compounding. Over time, interest is added to the bond’s face value, and that compounds. So, as time goes on, the value of the bond itself increases as more interest is added onto the higher principal.

How Do I Cash In a Savings Bond?

Once you’re ready to redeem a savings-bond, you have a couple of options, depending on the specific nature of the savings bond you have.

Steps to Redeem Paper Savings Bonds

If it’s an older paper savings bond, financial institutions, like a bank, can often cash them out. If the bank will not redeem these bonds, they should be able to point the owner towards an institution that can. It can be helpful to call the bank first to make sure it’s able to cash the full amount of a bond’s worth.

It’s also possible to cash savings bonds through Treasury Retail Securities Services. Bond owners typically just need to complete FS Form 1522, with a certified signature, and mail the bonds and form to Treasury Retail Securities Services, PO Box 9150, Minneapolis, MN 55480-9150.

How to Cash in Electronic Savings Bonds

Another option is to convert older savings bonds into electronic bonds. Go to TreasuryDirect.gov and link a bank account to cash the existing bonds out. If you have electronic bonds, you can cash them in at the Treasury Direct website. Typically, once redeemed, the bond amount is sent to an owner’s bank account within a few days.

If you have questions about the bond redemption process, you can contact Treasury Direct by filling out an email form on the website, or call them at 844-284-2676.

Note, too, that since the interest earned on savings bonds are subject to federal taxes (but not local state taxes), bond owners can either pay taxes every year they have the bond or wait until it’s redeemed and pay all the tax due at the end. After a bond is cashed out, an IRS Form 1099-INT is issued that shows the owner’s taxable gain.

How To Calculate the Value of Your Savings Bonds

Before figuring out how to redeem savings bonds, many recipients first want to calculate their bonds’ present value. Fortunately, TreasuryDirect.gov helps bond owners to do just that.

Using the TreasuryDirect Savings Bond Calculator

Using the TreasuryDirect Savings Bond Calculator can give you a number of pieces of information related to paper savings bonds.

On this government website, a bond recipient or purchaser can see how much their bonds are now worth by inputting the current date, indicating whether the bond is Series E, Series EE, or Series I, and noting the issue date and serial number. The site will store this information, so users can view it again at a later time.

It’s worth noting here a few things that the Treasury savings bond calculator cannot do, including:

•   verifying whether not a user actually owns the bonds

•   guaranteeing that a bond is eligible for redemption

•   confirming that the serial number is valid

•   creating a savings bond based on the information provided

Anyone who’s been issued an electronic savings bond can go to TreasuryDirect.gov and click the “Current Holdings” tab to see how much their bonds are worth.

Understanding Maturity Dates and Interest Rates

Savings bonds generally have maturity dates ranging from 20 to 30 years–some types all have 30-year maturity dates. Effectively, this means that they will accrue or earn interest for that entire time frame, until they mature and expire. The interest rate is the rate at which the bond will earn interest until it reaches maturity.

With that information, investors should be able to do some back-of-the-envelope math to get a sense of what their savings bonds can generate.

When To Cash a Savings Bond

When a Series EE bond arrives at maturity (after 20 years), the bond owner can redeem the principal on it or let it collect more interest for 10 years beyond the maturity date. To redeem, an owner must hold the bond for at least a year. It’s helpful to remember that if a savings bond is redeemed within five years of the purchase date, a three-month interest penalty must be paid.

When looking into how to cash in a Series I savings bond, the same penalty of three months’ interest is applied when the bond is redeemed less than five years from its purchase date.

As mentioned, Series E bonds purchased between 1941 to 1980 no longer earn interest. However, it’s still possible to cash out or redeem savings bonds from these years. To cash in Series HH bonds, the bonds must be mailed to Treasury Retail Security Services along with a completed FS Form 1522 and a certified signature.

Finding Lost or Stolen Savings Bonds

Sometimes owners lose printed bonds that were given to them as children. In that case, if an owner no longer possesses the physical copy of the bond, there are some steps that can be taken to replace them.

Replacement Process for Missing Bonds

If your bond is missing or stolen, you can go to TreasuryDirect.gov and fill out an FS Form 1048, which is a “Claim for Lost, Stolen, or Destroyed United States Savings Bonds.” All that’s needed is the issue date, face-value amount, bond number, the owner’s Social Security number (or the purchaser’s Social Security number), and names and addresses noted on the bonds.

On the Treasury site, it’s also possible to designate whether bonds were lost, stolen, or destroyed (and even attach any remaining pieces of the bond along with the form). By listing a bank account and routing number here, the Treasury can deposit the bond’s value into an owner’s account when they’re ready to redeem. It’s key to remember that the form must be certified with a bond owner’s signature. Once completed, the form can be sent to Treasury Retail Securities Services, P.O. Box 9150, Minneapolis, MN 55480-9150.

Tips to Secure Your Savings Bonds

Physical savings bonds can be stored securely in a safe or even at a safety deposit box at a bank. Investors could also register their bonds which cements ownership and beneficiary information for later reference.

How Do You Buy Savings Bonds?

Buying savings bonds these days is pretty easy: You can actually buy them directly from the Treasury.

Buying Savings Bonds Through TreasuryDirect

You can buy electronic Series EE and Series I bonds savings bonds from Treasury Direct. Simply go to the website and set up an account. Then fill out the form, including the amount you want to purchase in bonds, and use your credit card or debit card to buy the bonds. The electronic bonds will be kept in your account at Treasury Direct.

If you prefer paper bonds, you can only purchase paper Series I bonds. You’ll need to use your IRS tax refund to purchase them. When you file your taxes, fill out IRS form 8888 to indicate how much of your refund should go to I bonds.

Giving Savings Bonds to Others

It’s possible to give savings bonds to others as a gift, or for any reason whatsoever. The process of purchasing them is more or less the same — you can do so online via TreasuryDirect — and you can even send the recipient an announcement so that they know they’ve been given the bond.

The Takeaway

Many bond owners opt to reinvest money earned on their savings bonds once the bonds are redeemed. If they don’t need the cash right away, the gains on a bond could go towards another type of investment, where that money might continue to grow. Remember, too, that savings bonds need to be purchased from the U.S. Treasury.

It may also be worthwhile checking out options for online bank accounts, which can likewise offer competitive interest rates on your savings.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Do banks cash savings bonds?

You can cash paper savings bonds at many banks. Not every bank cashes paper bonds, however, so you may want to call the bank first and inquire. If you have electronic savings bonds you cash them in online at TreasuryDirect.gov. Simply log into your account to cash in your electronic bonds.

What is the best way to cash in savings bonds?

If you have electronic savings bonds, the best way to cash them in is at TreasuryDirect.gov. Just log into your online account to complete the transaction. The money can be transferred via direct deposit to your savings or checking account.

How long should you wait to cash in a savings bond?

If possible, it’s best to wait until a bond reaches maturity before cashing it in to take full advantage of the interest that accrues over time. However, if you want to cash in a bond before then, try to wait at least five years before redeeming it so you won’t lose any accrued interest. If you cash in a bond before the five-year mark, you will lose three months’ worth of interest. Finally, it’s important to know that you have to wait at least 12 months from the time of purchase before cashing in most savings bonds. Finally, it’s important to know that you have to wait at least 12 months from the time of purchase before cashing in most savings bonds.

Can I cash savings bonds before they mature?

It is possible to cash in a savings bond as long as you’ve owned it for more than one year. Doing so, however, means you forgo future interest payments, and effectively, leave money on the table. If you cash them out after owning them for less than five years, you’ll also lose three months of interest.

What taxes apply when cashing in savings bonds?

You will owe taxes on the income derived from a savings bond, and will receive a tax form as necessary outlining the interest you earned for each tax year.

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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

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