How and Where to Cash in US Savings Bonds

FT Contributor  | 

There are several types of savings bonds: EE savings bonds, I series bonds, and HH savings bonds. These U.S. savings bonds represent smart, low-risk investments and can be used as an integral aspect of a sound savings strategy. Although inherently different, many features are similar between the three types of savings bonds.

Cashing in Savings Bonds

The owner of the savings bond is encouraged to wait until the full maturity of the bond is achieved prior to cashing it in. If the money from the bond is needed immediately, the process of cashing them is fairly simple:

  1. Bring the savings bond(s) that are being cashed to a local bank or credit union.
    1. Be aware that some banks and credit unions do not deal with savings bonds.
  2. Bring proof of identity (clarify with your bank with what is acceptable prior).
  3. Determine whether you want to receive the payment via cash, through direct deposit, or if you would like to reinvest the money.

If you do not have an account with the bank that you are trying to cash the bond out at, the bank will still cash the bond as long as it is under $1,000. When the savings bonds are over $1,000 the bank may have you open a bank account, or there are other available options:

The bank will give a 1099-INT form to the bondholder at some point (after cashing the bond) for tax purposes since federal income tax will be charged for the interest accrued over the life of the bond. If you are curious about the amount of interest and how far into the life of the bond you are, you can calculate the value of your savings bond easily.

When to Cash In Savings Bonds

Savings bonds mature over a period of time where they gain interest. While most bonds mature over an interval of 30 years past issuance, owners may cash out at any time. After the 30 years have elapsed, the savings bond(s) are no longer accruing interest, so there is no need to continue saving them.

Savings bonds are required to be held for one year minimum before they can be cashed out. If the bonds are cashed out prior to the five-year mark, the bond owner will lose the last three months of interest gained. Unless having the money from the bond is necessary, it is recommended to let the bond fully mature to capitalize on the interest that is accrued.

EE Bonds

EE Bonds are interest-bearing government bonds that have a maturity life of 30 years. The possible amounts to be initially invested in EE Bonds ranges from $25 to 10,000 per year. The interest gained over the 30 years is guaranteed to at least double the initial investment made on the bond. It typically takes 20 years to achieve the doubling of the initial investment, but the potential interest accrues past that for another 10 years. EE bonds are not meant to be bought, sold or traded because they are non-marketable securities.

Other Paper Bonds: Series I and HH

Series I and HH bonds are both non-marketable, U.S government-issued savings bonds. Though they work very similarly to each other and EE Bonds, they have their differences. Series I bonds earn interest differently. The interest is gained in two ways:

  1. A fixed interest rate, which is a concrete rate set for the life of the bond by the Treasury Department, and;
  2. A variable inflation rate, which is a variable inflation rate that is modified every May and November and is altered by the Consumer Price Index.

HH bonds earn interest through a fixed coupon rate that is set in stone on the day of the initial investment and secured for ten years. After ten years, the U.S. Treasury sets the new rate for the excess life of the bond. Following ten years, it is up to the bondholder to decide whether holding onto the bond or redeeming it is the best choice, but there are financial advisors that can help in that decision.

Series I bonds have a maturity life span between 1-30 years, while HH bonds have a 20-year maturity rate. Additionally, Series I and HH savings bonds are redeemed in the same manner as EE savings bonds. Series I and HH savings bonds are not taxed by the state, but the interest is taxed federally when the bond is redeemed.

Electronic Bonds

On January 1, 2012 paper savings bonds are no longer distributable by the federal government, and the switch to electronic bonds was made. Electric bonds are bought at face value. Like paper bonds, the bond must be kept for at least a year prior to redeeming it, and anything redeemed before five years forfeits the last three months of accrued interest. The only way to redeem electronic bonds, as well as to purchase electric bonds, is through the TreasuryDirect website. When redeemed, the bond amount will be paid within a few business days. The funding will be deposited into a checking or savings account as chosen by the bond owner.


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This post was updated August 28, 2019. It was originally published August 29, 2019.