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Yahoo Personal Finance

How to cash a savings bond

Yahoo Personal Finance · Getty Images
Sarah C. Brady · Contributor
5 min read

Savings bonds, which are low-risk investments you purchase through the U.S. government, take 20 or 30 years to mature. But they can be cashed out as early as a year after you purchase them, or even sooner if you're facing a natural disaster.

For electronic savings bonds, you can easily cash one out online. But paper bonds sometimes require a visit to a bank or a notary public. To save yourself some trouble, you might try converting yours to an electronic bond first.

Cashing out your savings bond early can also be worth doing under certain conditions, but before you make the move, make sure you weigh the potential loss of interest and tax implications.

How to cash a savings bond

Your options for cashing out a savings bond depend on the type of bond you own. To get started, look at your bond type and compare the available options listed below.

By mail

If you have an HH, E, EE, I bond, or Savings Note, you can cash it by mail. Paper bonds are no longer issued, but if you do have an old paper EE or I bond, you may want to convert it to an electronic bond through TreasuryDirect so you can cash it online instead.

Here's how to cash a savings bond by mail:

  1. Visit a notary with your savings bond, photo ID, and an unsigned FS Form 1522.

  2. Once you’re together in person, sign the FS Form 1522 and have it certified.

  3. Mail the unsigned bond and signed FS Form 1522 to the U.S. Department of the Treasury at the correct P.O. Box:

Treasury Retail Securities Services. Minneapolis, MN 55480-0214

P.O. Box 214 (paper E, EE, or I bonds)

P.O. Box 2186 (H bonds)

P.O. Box 9150 (HH bonds)

Minneapolis, MN 55480-0214

At a bank

You can cash a paper Series EE, E, or I bond at a bank that provides bond-cashing services. Banks have a lot of variation in their policies, so check to see what your bank requirements are before visiting. For example, Capital One and USAA don't cash savings bonds at all, and U.S. Bank requires you to have a checking, savings, or money market account that's been open for five years.

Here's what the process usually looks like:

  1. Visit your bank or an institution that will cash bonds for non-customers.

  2. Present your ID.

  3. Confirm your Social Security number and address.

  4. Sign the bond.

  5. Make sure the bank employee stamps the bond to certify your signature.

Online

To cash your electronic savings bond, follow these steps:

  1. Log in to your TreasuryDirect account.

  2. Go to Manage Direct.

  3. Follow the link for "cashing securities."

  4. Choose the bond number and amount you want to redeem.

  5. Select the bank account where you want the funds deposited.

  6. Click "submit."

Will you be taxed on your savings bond?

You might have to pay federal income taxes on the interest your savings bond earns. For EE and I bonds, there could be an exception if you use the money for qualified higher education expenses such as tuition and certain fees, but you may also be subject to other taxes depending on the situation:

  • Federal: Estate, gift, and excise taxes

  • State: Estate or inheritance taxes

After you cash your bond, you'll need a form 1099-INT to report the interest on your tax return. You'll find this form in your TreasuryDirect account the following January after you cash in the bond, or you'll receive it from the financial institution that cashes your savings bond.

When can you cash your savings bond?

You can cash in your savings bond long before it matures, as long as you've held it for the minimum retention period of 12 months and it's worth $25 or more. To find the value of a paper bond, use the TreasuryDirect's Paper Savings Bond Calculator. For electronic bonds, log in to TreasuryDirect.

Should you cash in your savings bond?

You could potentially lose money if you cash in your savings bond too early. If it hasn't matured yet, it still has time to earn interest for you. You'll also have to forfeit your last three months of interest earnings if you cash in your savings bond before five years.

But there are still good reasons to consider cashing in a savings bond, whether before the maturity date or not:

  • It has matured: After maturity, savings bonds no longer earn interest, so you should cash yours in right away to avoid losing value due to inflation.

  • For higher education: If you pay qualifying higher education expenses for yourself, your spouse, or a dependent, the interest will be exempt from federal income tax when you cash in your savings bond.

  • Pay off high-interest debt: You can save money by cashing in your bond and using it to pay off debt that's accruing higher interest charges than you're earning on the bond. This is likely the case if you have credit card debt.

  • Earn more interest: You can potentially earn more interest by depositing the funds into an account with a higher rate, such as a high-yield savings account or certificate of deposit (CD). Before moving the money, check to see what the rate is on your bond. For EE bonds, the figure can change after year 20; for I bonds, it changes every six months.

  • Disaster expense: If you live in an official disaster area, you can cash out your bond before the 12-month holding period.

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