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.

Today, you can buy only two types of savings bonds–Series EE and Series I bonds–which take 30 years to mature fully. Depending on the available interest rates when purchased, these savings bonds may actually provide a better yield than simply keeping cash in your bank savings account.

There are, however, certain bonds that are no longer issued but are still earning interest or accruing value. If your savings bond is past its maturity date, it should be redeemed for cash.

The process for redeeming your savings bonds is easy, but you should make sure you understand the type of bond you own, how that type of bond accrues interest and when the ideal time is to redeem it.

A financial advisor could 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 the 1930s as a result of legislation passed by President Franklin D. Roosevelt. They were created to help Americans save money and support the government during the World War. 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

Currently there are only 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–0.1% annually as of Mar 2022. Typically EE bonds mature after 30 years, after which 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 1997 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. But if you cash it before five years, you lose the last three months’ interest. That is to say, 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 of them in paper form using your IRS tax refund. The interest rate for Series I savings bonds is a composite rate: 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 Nov 2021 and Apr 2022 is 7.12%, and interest is compounded semi-annually.

When it comes time to redeeming Series I bonds, the same rules apply. Maturity takes 30 years, and you can cash it in after one year. Cashing before five years leads to a 3-months’-interest penalty.

Many savers use Series I bonds as hedges against inflation, but the Treasury does limit the amount you can buy–up to $10,000 electronically and another $5,000 in paper bonds per year.

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 stopped paying interest in 2010. 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 some may still be earning interest. There are also Gulf Coast Recovery bonds, issued through 2007 to help fund relief efforts after the Gulf Coast hurricanes, and Patriot Bonds, 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?

The process for redeeming your savings bonds is relatively simple. If you have an electronic bond, you can log in to TreasuryDirect and use the link for cashing securities in ManageDirect. If you have paper bonds, you have two options: you can bring paper bonds to your local bank and ask if they will cash them for you, or you can send them to Treasury Retail Securities Services with a FS Form 1522. Savings bonds do not expire, so even far beyond their maturity dates you can still cash them.

Electronic bonds can be redeemed at partial value with a minimum of $25. Paper bonds must be cashed in full. Please note that the interest on savings bonds is subject to federal income tax, though if you are using these bonds to pay for education you may be able to apply for an education tax exclusion.

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 the FS Form 1522 and the bond will be paid through direct deposit. If you have lost or had your savings bond stolen, you can request that the U.S. Treasury reissue it through a FS Form 1048.

The 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.

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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