Are Old Bonds Worth Anything? What to Do With Them
Uncover the truth about your old bonds. This guide reveals how to determine their actual worth, from identification to redemption, even for challenging cases.
Old bonds can represent a significant financial asset, but their value is not always immediately apparent. While some older bonds may have matured, others could still be accumulating value or be redeemable. This article guides you through assessing and realizing the value of your old bonds.
Identifying Your Old Bond and Its Potential Value
The first step in determining an old bond’s worth is to examine the physical or digital document for key details. Common categories include U.S. Savings Bonds, corporate bonds, municipal bonds, and, historically, bearer bonds.
U.S. Savings Bonds, such as Series EE, HH, or I bonds, are issued by the U.S. Treasury. Corporate bonds are issued by companies, and municipal bonds are issued by state or local governments. Bearer bonds are unique because ownership is determined by physical possession, lacking registered ownership records.
Look for the issuer’s name, the bond’s face value, the issue date, and the maturity date. A serial number is important, particularly for U.S. Savings Bonds. For corporate and municipal bonds, identifying the CUSIP number (Committee on Uniform Securities Identification Procedures) is beneficial, as it is a unique nine-digit alphanumeric identifier used to track securities. This information is essential for accessing the bond’s current status and market value.
Locating the Current Value of Your Bond
After gathering bond details, determine its current value using various resources. For U.S. Savings Bonds, TreasuryDirect, the official website of the U.S. Treasury, provides online tools to check the current value and accrued interest for Series EE, HH, and I bonds. You will need the bond’s series, denomination, and issue date to use their savings bond calculator. Electronic savings bonds can be valued by logging into your TreasuryDirect account, where their current worth is displayed under the “current holdings” tab.
The valuation process for corporate and municipal bonds differs, as their values fluctuate based on market conditions, interest rates, and the issuer’s financial health. These bonds are traded on secondary markets. Contact a brokerage firm or financial advisor for assistance in valuing these bonds. Using the CUSIP number can aid this search, as it allows for precise identification of the security. Financial Industry Regulatory Authority (FINRA) also provides market data and a security lookup tool where you can search for fixed income securities by CUSIP to find trade history and other details.
If the bond was issued by a defunct company, its likelihood of holding significant value is low. However, check state unclaimed property databases, which hold uncollected funds. Bearer bonds present unique challenges for valuation and redemption due to their unregistered nature. Some government-issued bearer bonds are redeemable through TreasuryDirect, but corporate bearer bonds are more difficult to redeem.
Redeeming or Selling Your Bond
After determining your bond’s current value, convert it into cash. The redemption process varies by bond type. Electronic U.S. Savings Bonds can be redeemed directly through your TreasuryDirect account, with funds transferred to your linked bank account within two business days. Paper savings bonds require providing the physical bond and valid identification for redemption at a financial institution.
Corporate and municipal bonds are sold through a brokerage account. If you already have an account, you can place a sell order for the bond. If not, you will need to open an investment account with a brokerage firm to facilitate the sale. The price you receive for these bonds will depend on market demand and prevailing interest rates, which can differ from the bond’s face value if sold before maturity.
When redeeming or selling any bond, consider tax implications. Interest earned on bonds is subject to federal income tax; for U.S. Treasury bonds, it is federally taxable but exempt from state and local taxes. Interest from municipal bonds is exempt from federal taxes and may also be exempt from state and local taxes if the bond was issued by a government entity within your state of residence. Selling a bond for more than its purchase price before maturity may incur a taxable capital gain. Your financial institution will send you IRS Form 1099-INT or Form 1099-OID reporting interest income.
What to Do When Bonds Are Missing or Issuers Are Gone
Specific actions are required if a bond is lost or destroyed, or its issuer no longer exists. If you have lost a U.S. Savings Bond, initiate a replacement process by submitting FS Form 1048 to the Treasury Department. This form requires details such as the bond’s face value, approximate issue date, the owner’s name, and Social Security number. The replacement bond will be issued electronically into a TreasuryDirect account.
If a corporate or municipal bond issuer is defunct or bankrupt, the bond’s value may be diminished or lost. In such cases, checking state unclaimed property databases remains a possible avenue. These databases collect dormant or abandoned assets, including financial instruments. Searching these state-managed resources can sometimes reunite individuals with forgotten assets.