How to Redeem Your Savings Bonds

U.S. savings bonds are a low-risk investment product backed by the U.S. government. Used by generations of Americans to generate a stable return on cash savings, savings bonds are purchased through the U.S. Department of Treasury and earn interest over time. However, knowing how to redeem savings bonds is important for any investor. The process is rather simple, but you should make sure you understand the type of bond you own and how that type of bond accrues interest, as well as the ideal time to redeem it.

A financial advisor can help you best determine if savings bonds are an appropriate investment for you. Find a qualified advisor today.

What Are Savings Bonds?

Savings bonds were created in 1935 as a result of legislation passed by President Franklin D. Roosevelt. They were created not only to help Americans save money but also to support the government financially. By buying a U.S. savings bond, you are essentially lending money to the U.S. government at a set interest rate.

Types of Savings Bonds

Two types of savings bonds sold by the U.S. Treasury: Series EE and Series I savings bonds. Older series of bonds, such as the Series E and Series HH bonds, may still be accruing interest or may be redeemable at face value.

Series EE

Series EE savings bonds are sold electronically via TreasuryDirect and earn a fixed interest rate of 2.70% annually through October 31, 2025. EE bonds typically mature after 30 years when they stop accruing interest, but regardless of your rate, an EE bond will be worth double its face value after 20 years. If held that long, the U.S. Treasury guarantees a one-time adjustment to honor this.

Series EE savings bonds bought from May 1995 to April 2005, however, earn a variable rate that changes every six months. To determine their value now, you can input your information in the Treasury’s savings bond calculator.

You can legally cash your EE savings bond after one year. However, if you cash it before five years, you will lose the last three months’ interest. That means if you cash an EE bond after 18 months, you will only receive the first 15 months’ worth of interest, in addition to the principal.

Series I

Series I savings bonds are also sold electronically through TreasuryDirect, but you can purchase some in paper form using your IRS tax refund.

The interest rate for Series I savings bonds is a composite rate. This is a fixed interest rate set at the time of purchase, plus an inflation rate that is recalculated twice a year. The composite rate for I bonds purchased between May 1, 2025 to October 31, 2025 is 3.98%., Interest is compounded semi-annually.

When redeeming Series I bonds, the same rules apply. Maturity takes 30 years, and you can cash it in after one year. Cashing in these savings bonds before five years leads to a penalty worth three months of interest.

Many savers use Series I bonds as hedges against inflation, but the Treasury does limit the amount you can buy. Investor may only buy a maximum of $10,000 electronically in Savings EE and I bonds. However, there are no limits for paper bonds.

Other Bond Series

There are also older types of bonds that are no longer being issued but are still valid. The Series E bond was the precursor to the Series EE bond and was discontinued in 1941. If you own or inherited a Series E bond, you may be able to redeem it for cash.

Additionally, you may hold a Series HH savings bond, which were issued between 1980 and 2004. These bonds had a maturity date of 20 years and already stopped earning interest.

Other savings bonds include Gulf Coast Recovery bonds, which was issued through 2007. These were designed to help fund relief efforts after the Gulf Coast hurricanes, and Patriot Bonds, which were issued through 2011 to help finance antiterrorism after 9/11. These are no longer sold by the U.S. Treasury but may still be earning interest.

How Do You Redeem Savings Bonds?

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The process for redeeming your savings bonds is relatively simple:

Electronic bonds. If you have an electronic bond, you can log in to TreasuryDirect and use the link for cashing securities in ManageDirect. Electronic bonds can be redeemed at partial value with a $2 minimum.
Paper bonds. If you have paper bonds, you have two options. You can bring paper bonds to your local bank and ask it to cash them for you, or you can send them to Treasury Retail Securities Services with a FS Form 1522. Paper bonds must be cashed in full.

Savings bonds do not expire, so you can still cash them even beyond their maturity dates.

Please note that the interest on savings bonds is subject to federal income tax. However, if you are using these bonds to pay for education, you may be able to avoid paying taxes.

You must be the owner or co-owner of the savings bond in order to redeem it. If you inherited a bond, the bond will form part of the last surviving owner’s estate and can be redeemed at banks that pay savings bonds.

If you inherited a Series HH savings bond, these cannot be redeemed at financial institutions. Instead, you will need to mail in FS Form 1522, and the bond will be paid through direct deposit.

If your savings bond was lost or stolen, you can request that the U.S. Treasury reissue it through FS Form 1048.

How to Check the Value of Your Savings Bonds

Before you redeem your savings bonds, it’s important to know exactly how much they’re worth and whether they’ve reached maturity.

The U.S. Treasury provides a free Savings Bond Calculator on its TreasuryDirect website so you can check a savings bond’s value. To use it, you’ll need to know the bond’s series, denomination, serial number and issue date.

If you have paper bonds, you can find the issue date in the upper right corner and the serial number in the lower right corner. For electronic bonds, this information is available in your TreasuryDirect account.

Once entered, the calculator will display the bond’s total value, including the original purchase price and all interest accrued to date.

You can also check maturity dates and interest accrual schedules through TreasuryDirect. EE and I bonds generally earn interest for up to 30 years, but some older bonds may have shorter terms.

Knowing how to redeem savings bonds this way helps ensure that you redeem your bond at the right time. This will help you maximize your return while avoiding the loss of potential interest.

Tax Implications of Redeeming Savings Bonds

While savings bonds can be a good investment, the interest you earn on them is subject to certain tax rules. Interest from EE and I bonds is taxable at the federal level but is exempt from state and local income taxes, which can make them more tax-efficient than other interest-bearing accounts.

You can choose to defer paying federal income tax on the interest until you redeem the bond or it reaches final maturity, whichever comes first. Some investors prefer this deferral so their money keeps working for them in the meantime.

Tax break for education expenses

There is also a potential tax break if you use your bonds for qualified education expenses under the Education Savings Bond Program.

If you meet certain requirements, including income limits, eligible expenses (such as tuition and fees) and ownership rules, you may be able to exclude the bond interest from federal income tax entirely. To qualify, the bonds must be registered in your name (or jointly with your spouse) and issued after you turned 24.

Bottom Line

Savings bonds are stable, low-risk investments issued by the U.S. Treasury. Most bonds require 30 years to reach maturity, but you can redeem them in as little as one year if you are willing to pay an interest penalty. You can cash your paper savings bonds at local banks or by mailing them in, and electronic bond values will be sent to you through direct deposit. If you’re looking to invest through the U.S. Treasury, knowing how to redeem savings bonds is crucial so you can be sure to redeem them at the right time and with the right tax deductions.

A financial advisor could help you incorporate savings bonds into your existing portfolio based on your financial goals.

Tips for Building Wealth

Not sure if investing in U.S. savings bonds will help you meet your long-term goals? For a solid financial plan, consider speaking with a qualified financial advisor. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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