Can You Cash a Savings Bond at Any Bank?
Navigate the process of cashing savings bonds. Understand bank policies, online options, and what you'll need for redemption.
Savings bonds are a secure, low-risk investment product issued by the U.S. Department of the Treasury. These debt securities allow individual investors to lend money to the government, earning interest over a specified period. They serve as a straightforward savings mechanism, often used for long-term financial goals, educational funding, or as gifts. This investment vehicle is backed by the full faith and credit of the U.S. government.
Where Savings Bonds Can Be Cashed
Many financial institutions, such as banks and credit unions, can cash savings bonds, but they are not obligated to do so, especially for individuals who are not account holders. Policies vary significantly; some may require you to be a customer for a certain period before processing a bond redemption. It is advisable to contact your bank or credit union beforehand to inquire about their specific policies, cashing limits, and required documentation.
Electronic savings bonds are best cashed through TreasuryDirect, the U.S. Department of the Treasury’s online platform. This system allows bond owners to manage and redeem Series EE and Series I bonds directly. Funds from electronic bond redemptions are typically deposited into a linked bank account within one to two business days. Paper savings bonds can also be redeemed by mail directly to the Treasury using FS Form 1522 if a bank is unwilling to cash them.
Requirements for Cashing Savings Bonds
To cash a savings bond, you need specific documents and information. Valid identification is necessary, such as a state-issued driver’s license or other government-issued photo ID. Some institutions may require two forms of identification, especially for non-account holders. Your Social Security Number (SSN) is essential for tax reporting, as interest earned on savings bonds is subject to federal income tax.
For paper bonds, the original bond certificate must be presented. The bond owner or co-owner must sign the bond in the presence of the bank teller or have their signature certified, particularly for amounts over $1,000. Electronic bonds require access to your TreasuryDirect account for redemption. For direct deposit, you will need to provide your bank account and routing number.
Key Factors Affecting Cashing
Savings bonds cannot be redeemed until at least one year after issue. Cashing a bond before five years results in a penalty, forfeiting the last three months of interest earned. For example, redeeming a bond after 24 months means you receive only 21 months of interest.
Only the registered owner, a co-owner, or a designated beneficiary (with documentation like a death certificate) can redeem a bond. Bonds cannot be sold or traded. While TreasuryDirect has no limits on electronic bonds, banks may impose daily or transaction limits for paper bonds. Electronic bonds can be redeemed for a minimum of $25, and partial redemptions are possible if at least $25 remains. Paper bonds must be cashed for their entire value.