How to Cash a Bond: Step-by-Step Instructions

U.S. savings bonds are a type of debt security issued by the U.S. Department of the Treasury, representing a loan from an individual to the federal government. These bonds are considered a safe investment, backed by the full faith and credit of the U.S. government. Individuals often choose to cash a bond when it reaches its full value, or when they require access to the funds for various financial needs. Redeeming a bond requires understanding its characteristics and following established procedures.

Understanding Your Bond

Understanding your bond’s specific characteristics is the first step before cashing it. Savings bonds are issued in different series, such as Series EE, Series I, and older Series HH bonds, each with distinct features. Electronic savings bonds are held digitally within a TreasuryDirect account, while paper savings bonds, particularly older Series EE and I bonds, are physical certificates. The issue date on a paper bond is significant, as it influences its maturity and interest accrual.

Bonds earn interest over time and have defined maturity periods. While a bond can generally be cashed after a minimum holding period of one year, redeeming it before five years typically results in the forfeiture of the last three months of interest. For example, a bond cashed after three years would only earn interest for 33 months. Series EE and I bonds generally continue to earn interest for up to 30 years from their issue date, after which they reach final maturity and stop accruing interest.

Ownership is recorded through registration, determining who can legally cash the bond. This includes the registered owner, a co-owner, or an individual with proper legal authority, such as a beneficiary with a death certificate for a deceased owner.

Gathering Necessary Information and Documents

Before initiating redemption, gather all required information and documents. A valid government-issued photo identification, such as a driver’s license or passport, is typically required to verify identity.

This identification allows financial institutions and the Treasury to confirm the bond presenter’s entitlement to funds. Specific forms may also be necessary, particularly for paper savings bonds.

For instance, FS Form 1522 is often used for requesting payment for paper savings bonds. Accurately complete all informational fields on any required forms. This includes details from the bond itself, such as the serial number and issue date, along with personal information like your Social Security number and bank account details for direct deposit.

Accuracy in filling out these forms helps prevent delays in processing the redemption request. For paper bonds, if the total value exceeds $1,000, each person whose signature is required must sign the form in the presence of a notary or an authorized certifying officer.

Choosing Your Redemption Method

The method for cashing a bond depends primarily on its type and how it is held. Electronic savings bonds, which are managed through TreasuryDirect accounts, must be redeemed online.

The TreasuryDirect website provides the platform for managing these digital assets. Paper savings bonds offer several redemption avenues.

Many banks and credit unions offer services to cash paper bonds, providing a convenient option for bondholders. Contact your financial institution beforehand to confirm their policies, as not all banks offer this service, and some may require you to be an account holder.

If a local financial institution cannot cash a paper bond, or for certain older bond series, mail the bond directly to the U.S. Treasury’s Bureau of the Fiscal Service.

Executing the Redemption Process

The steps for cashing a bond vary based on the chosen redemption method.

For electronic bonds held in TreasuryDirect, the process begins by logging into your account. Navigate to the “ManageDirect” tab, where you can select the “Redeem securities” option. Choose the specific bond(s) for redemption and specify the amount (minimum $25; partial redemptions allowed, leaving at least $25). Confirm the bank account for deposit.

The funds are typically transferred to your linked bank account within two business days.

When cashing paper bonds at a financial institution, present the bond(s) and identification to a representative. You will sign the bond in the presence of a bank official, who will then process the transaction.

Depending on the institution’s policies, you may receive cash immediately or have the funds deposited directly into your bank account.

For paper bonds mailed to the U.S. Treasury, securely package the bond(s) with necessary forms, such as FS Form 1522. The mailing address for the Bureau of the Fiscal Service is provided on the form itself. Using certified mail or a trackable service is recommended for security.

The processing time for mail-in redemptions may take longer than electronic or in-person transactions. Interest income from cashed bonds is generally reported on Form 1099-INT, which is issued by TreasuryDirect or the financial institution in January of the year following the redemption.