You can cash in I bonds through your bank, a broker, or the Treasury Direct website, but the timing and penalties depend on how long you have held them

I bonds held for less than five years carry a three-month interest penalty when you cash them in. If you have held an I bond for five years or longer, you can cash it in with no penalty and receive the full value plus all accrued interest. The actual process is straightforward — you either visit your bank, contact a broker, or log into Treasury Direct — but the route you take depends on where the bond is registered and what you want to do next with the money.

The penalty structure is the single most important thing to understand before you cash in. A bond purchased less than five years ago will lose three months of interest when redeemed. That means if you bought a bond 18 months ago and it has earned $50 in interest, you will receive only $35 when you cash it in. If the bond is five years old or older, you keep every dollar of interest earned, no matter when you redeem it.

Key Takeaways

  • I bonds held for less than five years lose three months of interest when cashed in; bonds held five years or longer have no penalty.
  • Bonds registered in your name at a bank or broker are cashed through that institution; bonds in Treasury Direct are redeemed through your online account.
  • The redemption process takes one to three business days for bank and broker redemptions, and up to two weeks for Treasury Direct transfers to your bank account.
  • You will receive a 1099-INT form in January for the interest earned in the previous year, which you must report on your federal tax return.

Cashing in I bonds held at a bank or broker

If your I bond is registered at a bank or brokerage firm, you can redeem it by visiting in person or calling the institution. Bring or provide your Social Security number, the bond certificate number (if you have it), and your account information. The bank or broker will verify your identity and process the redemption on the spot or within one business day.

The funds will be deposited into your account at that institution within one to three business days. If you want the money transferred to a different bank, you can request a check or arrange an electronic transfer, though this may add a few days to the timeline. Ask the institution whether they charge a redemption fee — most do not, but some brokers may charge a small transaction fee.

Redeeming I bonds through Treasury Direct

I bonds purchased through Treasury Direct (the official U.S. Department of the Treasury website) are redeemed entirely online. Log into your Treasury Direct account, navigate to the "Manage Securities" section, and select the bond you want to redeem. Confirm the redemption amount and the bank account where you want the funds sent.

The Treasury will process the redemption and send the funds to your linked bank account within two weeks. You cannot redeem a Treasury Direct bond through a bank or broker — you must use the online system. If you have forgotten your Treasury Direct login, you can reset it using your email address and Social Security number on the Treasury Direct website.

What happens if you cash in before five years

The three-month interest penalty applies to any I bond redeemed before the five-year mark. If you bought a bond on March 15, 2023, and redeem it on March 14, 2028, you have held it for just under five years and will lose three months of interest. If you redeem it on March 15, 2028, the five-year period is complete and there is no penalty.

The penalty is calculated automatically by the bank, broker, or Treasury Direct system — you do not have to do anything. The redemption amount shown will already reflect the three-month deduction. If the math seems wrong, ask the institution to show you the calculation: the accrued interest minus three months of the most recent interest earned.

Tax reporting when you redeem

The interest you earn on I bonds is subject to federal income tax, though not state or local tax. You do not pay tax when you cash in the bond — instead, you report the interest on your federal tax return for the year in which you redeem it. The bank, broker, or Treasury will send you a 1099-INT form in January showing the interest earned during the previous calendar year.

If you held the bond across two calendar years, the interest will be split between two 1099-INT forms. For example, if you bought a bond in November 2023 and cashed it in March 2024, you will receive one 1099-INT in January 2024 for interest earned in 2023, and another in January 2025 for interest earned in 2024. Report both amounts on the corresponding year's tax return.

Redeeming I bonds owned by minors or in trusts

If an I bond is registered in a minor's name, a parent or legal guardian can redeem it on the child's behalf at a bank or broker by providing the child's Social Security number and proof of guardianship. Treasury Direct bonds owned by minors cannot be redeemed online by the parent — you must contact Treasury Direct customer service at 844-284-2676 to request a redemption.

I bonds held in a trust or estate require the trustee or executor to initiate the redemption. The process is the same as for individual bonds, but you will need to provide documentation of your authority to act on behalf of the trust or estate. Contact the institution holding the bond to ask what documents they need before you proceed.

What to do if you cannot find your bond

If you own an I bond but cannot locate the certificate or remember where it is registered, you can search for it through the Treasury Hunt tool on the Treasury Direct website. Enter your Social Security number and last name, and the system will show any bonds registered in your name, whether they are in Treasury Direct or held elsewhere.

If the search shows a bond you do not recognize, or if you find a bond but do not remember the password or login for that institution, contact the bank or broker directly with your Social Security number and identifying information. They can help you locate the account and reset your access. For Treasury Direct bonds, use the password reset function on the Treasury Direct login page.

Frequently Asked Questions

Can I cash in an I bond before one year?

No. I bonds have a one-year holding period, and you cannot redeem them before that time has passed. If you need the money sooner, you will have to wait or explore other options. After one year, you can redeem at any time, though you will lose three months of interest if you cash in before five years.

What if I lost the paper bond certificate?

Paper I bonds can be redeemed at any bank, even without the physical certificate. Bring your Social Security number and photo ID. The bank can look up the bond in the Treasury system using your information. If the bond is in Treasury Direct, you do not need the certificate — just log into your account online.

Do I have to cash in the whole bond, or can I redeem part of it?

You must redeem the entire bond. You cannot cash in half of a bond and keep the other half. If you own multiple bonds, you can choose which ones to redeem and leave others untouched.

What if the redemption amount seems wrong?

Ask the bank, broker, or Treasury Direct to show you the calculation. They should provide the original purchase price, the accrued interest, and any penalty deducted. If you held the bond less than five years, verify that three months of interest was subtracted. If the numbers still do not match, request a supervisor review.

Can I redeem an I bond at any bank, or only the one where I bought it?

If the bond is a paper certificate, most banks will redeem it. If it is in Treasury Direct, you must redeem it through your Treasury Direct account. If it is registered at a specific brokerage, you must redeem it through that brokerage — you cannot take it to a different institution.