How to Cash in Savings Bonds
Whether you bought savings bonds during inflation's peak or have older bonds collecting dust, take these steps to cash them in.
Thanks to rising inflation, Series I savings bonds enjoyed a boom in popularity. I bonds issued from May 2022 through October 2022 earned a composite rate of 9.62% for the first six months, which prompted investors to stash more than $1 billion in I bonds in October 2022 alone.
The current I bond rate, which is valid from May 1 till October 31, is 4.26% — still a reasonably attractive return for a no-risk investment.
Although savings bonds can earn interest for up to 30 years, you may want to redeem them earlier. You can cash in I bonds as well as EE bonds (which pay a fixed 2.4% rate for bonds issued from May 1 to October 31), after you've owned them for a year. But if you redeem bonds within five years, you'll lose the last three months of interest.
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Here are the steps you need to take if you're ready to cash in your savings bonds.
1. Determine the value of your bonds
Before you cash in your bonds, find out how much they're worth. Go to TreasuryDirect and log in to your account. As of late October, TreasuryDirect is requiring customers to log in to their accounts with ID.me, a digital identity-verification service. There, you'll find a list of securities you own and their current value.
If you own paper savings bonds, which were mostly phased out in 2011, go to Calculate the Value of Your Paper Savings Bond(s) at TreasuryDirect.
2. How to redeem electronic bonds
Log in to your account at the TreasuryDirect website and click on the link to cash out your securities.
The minimum redemption amount is $25. If you cash out part of your bond, you'll only receive interest on the redeemed amount.
3. How to redeem paper bonds
Unlike electronic bonds, paper bonds must be redeemed for their full value. One option is to take them to a bank that will redeem savings bonds (not all do).
Fill out FS Form 1522 (PDF), and bring it with you to the bank. You'll need a certified signature, such as one from a notary public if you're cashing out more than $1,000.
If you can't find a bank that will cash your savings bonds, fill out FS Form 1522 and mail it to the Treasury address listed on the form. Be aware, though, that there is a long wait now for mail submissions, with requests taking 11 months or more to process.
Paper bonds are only cashed out through direct deposit, so you have to include your bank's routing and account number.
If you have bonds that are missing, lost, stolen or destroyed, TreasuryDirect no longer has an online tool to track them down. Instead, you can fill out and mail FS Form 1048 (PDF) to request a claim. Provide any details about the bonds that you have on hand, including the purchaser's Social Security number as well as bond serial numbers and issue dates. If you're not named as the owner of a bond, you must mail in documentation to prove you have a legal right to redeem it.
Savings bonds and taxes
Interest on savings bonds is free of state and local income taxes, and you can defer federal tax until you cash in the bond. Once you redeem your savings bond, though, you'll owe taxes on the interest you've accrued.
If you redeemed your bonds online, the Treasury will mail you a Form 1099-INT, which you'll use to report taxable interest on your tax return. If you cashed out your bonds through a bank, the bank should send you a Form 1099-INT.
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