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How to Cash in Savings Bonds

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You can not cash in savings bonds that are less than one year old.  After holding a savings bond for 1 year you can cash it in at anytime, however there are some additional factors to consider.  Here is a video overview of how to cash in savings bonds, the text version of which is below the video.

Open an account with Treasury Direct

How to convert paper savings bonds into electronic bonds

  • When cashing in savings bonds within the first five years of purchase, you will have to forgo the previous 3 months interest payments.
  • U.S. Savings Bonds fully mature in 30 years, meaning they stop earning interest at that point.
  • You can cash in savings bonds at anytime after the 30 year maturity date, but you do not earn any additional interest when holding for longer than 30 years.

Who can cash in savings bonds?

In order to cash in a savings bond you must be the owner, co-owner or have power of attorney over the owner or co-owner.  If you are the legal guardian of either that is also sufficient.  If the owner of the bond has died, then the bond goes to the beneficiary listed when the bond was purchased.  If there is not a beneficiary listed, the bond passes to the estate of the deceased owner.  The primary owner and co-owner listed have equal rights over the bond, meaning the co-owner can redeem the savings bond without the owner’s consent and vice-versa.  Be sure to take careful consideration over whom you list as the co-owner!

How do you cash in a savings bond?

There are two ways that you can cash in a savings bond, electronically through TreasuryDirect or through a participating local bank. However, it’s unclear how many banks will provide savings bond redemption services now that the government has stopped selling paper savings bonds.  You can convert  paper I and EE/E bonds into electronic bonds through the Treasury’s SmartExchange program. The first step to using this program is opening a account with Treasury Direct, which you can do here.

To help you with that process there is a list of detailed Instructions on how to convert paper savings bonds to electronic bonds here.  When using Treasurydirect, you can cash in an unlimited number of savings bonds for an unlimited amount of money. The funds will arrive in your checking or savings account within one business day of making the request. When you cash in savings bonds with a bank, the maximum cash amount that you can immediately receive is $1,000.

1099-INT Form

When you cashing in a savings bond, you will be issued a 1099-INT form on any interest earned.  Make sure you file your form with your taxes, the government already has a copy and if you do not file this form the IRS will withhold your federal return.  That being said double taxation of savings bond income happens quite often.  If you elected to report the interest income each year, the 1099-INT will not be reduced by the amount of interest income that was reported in previous years.  It is your responsibility to keep track of this information and properly file your return.

This lesson is part of our Free Guide to Buying Savings Bonds.  You can find more free guides here.

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David Waring

David Waring was the founder of LearnBonds.com and has been a major contributor to the extensive library of investing news and information available on the site. Until the launch of Learnbonds.com in late 2011 there was no single site on the internet catering exclusively to the individual bond investor. This was true even though more individuals own stocks than bonds. Learn Bonds was launched to fill that gap.