Where Can I Cash My U.S. Savings Bonds?

U.S. savings bonds are a government security, allowing individuals to lend money to the U.S. government. Backed by the full faith and credit of the U.S. government, these bonds are considered a secure investment. Many individuals redeem their savings bonds for various financial needs. Understanding the process for cashing these bonds is important.

Preparing Your Savings Bond for Redemption

Before cashing a U.S. savings bond, certain preparations are necessary. Bonds must be held for at least one year from their issue date before they become eligible for redemption. If a bond is redeemed before five years, a penalty of three months’ interest will be forfeited. For example, cashing a bond after 24 months means only 21 months of interest will be received.

Redemption is limited to the registered owner, co-owner, or a legal representative such as a beneficiary or someone with legal authority over an estate. Valid government-issued photo identification, such as a driver’s license, state ID, or passport, is required to verify identity. For paper bonds, their physical condition is important; they should not be defaced, torn, or altered.

The bondholder’s signature is required for redemption. For large amounts or specific transfers, a guarantor’s signature might be necessary. This signature certifies identity and can be obtained at financial institutions with a medallion signature guarantee service. Ensuring all personal details on the bond match current records, especially after a name change, is important and may require additional documentation like a marriage certificate.

Where to Cash Your Savings Bond

Once a savings bond is prepared, several methods and locations are available for redemption. Many financial institutions, including banks and credit unions, cash paper savings bonds. It is advisable to call ahead to confirm they provide this service, as some institutions may only cash bonds for existing account holders or have daily limits on redemption amounts.

When cashing a paper bond in person, the bondholder presents the bond and identification to a teller, signing the bond in their presence. Paper bonds must be cashed for their entire value; partial redemptions are not permitted. While a bank might impose limits, the Treasury does not have limits when bonds are sent directly.

Electronic savings bonds are primarily redeemed through TreasuryDirect, the U.S. Treasury’s online platform. Bondholders log into their TreasuryDirect account, select the bond, and specify the amount and destination bank account for the proceeds. Electronic bonds allow for partial redemption, provided at least $25 is redeemed and $25 remains in the bond.

For large redemption amounts, bonds held by estates, or when local banks do not redeem, cashing bonds by mail is an option. This involves completing FS Form 1522. The completed form, along with the physical paper bonds, is mailed to the Treasury Retail Securities Services.

Receiving Your Redemption Proceeds

Upon redemption, bondholders receive funds, which typically include the original principal plus accumulated interest. For redemptions at a financial institution, immediate cash or a check might be provided. For redemptions through TreasuryDirect or by mail, proceeds are generally disbursed via direct deposit to a bank account within a few business days.

Interest on savings bonds stops accruing once the bond is redeemed or reaches its final maturity, which for most Series EE and I bonds is 30 years. Interest earned on U.S. savings bonds is subject to federal income tax in the year redeemed. However, interest is exempt from state and local income taxes.

Interest income from redeemed savings bonds is reported to the IRS. Bondholders receive a Form 1099-INT, detailing interest earned for federal income tax filing. While interest is taxed upon redemption, using proceeds for qualified higher education expenses may exclude some or all interest from federal taxable income.