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.
How Do I Cash In a Savings Bond?
Once you’re ready to redeem a savings-bond, you have two options. 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.
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.
It’s also possible to cash savings bonds through Treasury Retail Securities Services. Bond owners 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.
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.
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.
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.
💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.
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, they 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.
Since savings bonds earn interest over time, many recipients opt not to redeem their bonds before that initial five-year mark has passed. Bond owners could wait until the bond reaches maturity or, perhaps, check out a savings-bond calculator to determine how much value might accrue on their still maturing bonds. If a bond owner is pleased with its current value, they might then look into how to redeem the savings bonds for cash.
How Do You Buy Savings Bonds?
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.
Investing Your Savings Bonds With SoFi
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. All you need is an investment account to reinvest the money earned on your bonds.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
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.
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