How to Cash in Savings Bonds

  • You can redeem a savings bond at a bank or through the US Treasury Department.
  • Savings bonds pay interest for 30 years, but you can redeem them after five years without paying a penalty.
  • Not all banks cash savings bonds, and some require that you already have an account with the institution.

President Franklin D. Roosevelt introduced savings bonds in 1935. Since then, bonds have become mainstream investments, especially for people who want a guaranteed rate of return.

If you have a savings bond, you may be able to redeem it now. The process will depend on the type of bond you have, how long you’ve held it, and the bank you use.

How does a savings voucher work?

Savings bonds are debt instruments that allow the government and other entities to leverage debt to finance business projects and increase the return on those investments.

So when you buy a savings bond through the US Treasury Department, you are essentially lending money to the government. In return, you get a low-risk bond that offers periodic earnings in the form of coupon payments for up to 30 years – and a return on the principal amount you bought the bond once it matures.

Once you’re ready to collect your deposit money, you can probably cash it in – or “redeem” it – at a bank. However, the exact process depends on your situation.

How to Cash in Savings Bonds

There are two ways to cash in a savings bond: go to a bank or submit a form to the US Treasury Department. Going through your bank might be the quickest option.

1. Redeem your savings bond at a bank

If you own or co-own a bond, you may be able to cash it in at a bank. You must provide proof that you are legally entitled to redeem the deposit if you are not listed as the owner. For example, you may want to cash your child’s bond while they are still a minor. You would need to write a statement on the back of the bond stating either that the child lives with you or that you have custody of him, and that he is too young to apply himself.

Cashing in a savings bond can be relatively easy if you take everything with you and know what to expect. For a smooth process, contact the bank beforehand to discuss your options before you travel.

What should you bring when redeeming a savings bond?

You will need to bring the following items to a bank when you are ready to cash a deposit:

  • Paper bond(s) — you cannot redeem an electronic bond at a bank. You will need to use the second option, which is to go through the US Treasury Department.
  • Government ID – which can be your driver’s license or passport
  • Owner’s original death certificate, if you are the legal beneficiary of the deceased bond owner
  • Form 1522 – fill it out in advance, but wait to sign it until you are at the bank. If you do not have the form with you, the bank may be able to provide you with a copy.

Can you cash in a savings bond at any bank?

You may be able to redeem a savings bond at a bank, but not all institutions redeem bonds.

“Generally, you’ll have better luck with larger national institutions,” says Abugideiri. “Larger institutions have more robust infrastructures and can handle different types of transactions. Whereas your smaller one-off institutions or even

credit unions

are going to have their own limits that are subject to these types of banking institutions.”

It’s usually easier to redeem a bond at a bank where you already have an account than at a bank where you don’t. For example, Bank of America requires you to have a Bank of America checking account or savings account to redeem a bond. If you’ve had the account for less than six months, you can only trade up to $1,000 per day.

You might be able to cash a deposit at a bank where you don’t have an account, but it depends on the institution. It might be easier to open an account at a bank and then pay off the bond.

Instead of going through a bank, you may prefer to redeem a bond through the US Treasury Department. To do this, download and complete Form 1522 from the Treasury website. If you redeem more than $1,000, you will need to sign it in front of a notary or certifying officer. Then send the form to the following address:

Treasury Services to individuals on securities

Box 9150

Minneapolis, Minnesota 55480-9150

2. Redeem your savings bond with the US Treasury Department

If you have an electronic bond or simply prefer not to go through a bank, you can cash a bond through the United States Department of Treasury. To do this, download and complete Form 1522 from the Treasury website. If you redeem more than $1,000, you will need to sign it in front of a notary or certifying officer. Then send the form to the address mentioned above.

Types of Savings Bonds

There are different types of savings bonds, some of which, such as Series E and HH bonds, have gone out of rotation over the years. Now, there are still two types you can buy: Series EE bonds and Series I bonds.]

Series EE Bonds

If you purchased a Series EE bond in May 2005 or later, it pays a fixed interest rate issued at the time of purchase. If you bought it before May 2005, the rate is variable. The government assigns Series EE bonds an interest rate every November and May. From November 2021 to April 2022, the rate is 0.10%.

Series EE bonds double in value after you hold them for 20 years. For example, if you paid $100 for the bond, it is worth $200 after 20 years.

You can buy Series EE bonds in penny increments, from $25 to $10,000 per year.

Series I Bonds

Series I bonds earn a combination of a fixed interest rate and a floating rate that is intended to track inflation. This is fixed every November and May. From November 2021 to April 2022, the combined Series I bond rate is 7.12%.

Each year, you can buy $25 to $10,000 of Series I electronic bonds or $50 to $5,000 of paper bonds.

Buy in penny increments starting at $25 for electronic bonds, or in denominations of $50, $100, $200, $500 or $1,000 for paper bonds.

Series EE and Series I bonds pay interest for 30 years when they mature.

“Before EE bonds, the government sold E bonds. And although they no longer pay interest, they are still redeemable,” says Yusuf Abugideiri, senior financial planner at financial services firm Yeske Buie. Some banks will redeem Series E bonds, but you may need to go through the Treasury Department website.

When can you redeem a savings bond?

You can redeem Series EE and Series I bonds as early as 12 months after purchase. However, if you redeem them before the five-year mark, you will lose three months of interest.

Abugideiri recommends holding a Series EE bond for at least 20 years, if possible, because the value doubles after 20 years. “So if you leave early, part of the ‘penalty’ is that you give up returns that are otherwise guaranteed for the future,” he says.

Savings bonds stop earning interest after 30 years. There’s no penalty if you redeem a bond after, say, 32 years instead of 30, “…other than the implied penalty for missed returns,” says Abugideiri. “If there were two years where you could have taken these products and invested in a better performing asset, you would have given up this income.”

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