The basic process for cashing in an I bond

You cash in an I bond by contacting the U.S. Department of the Treasury through TreasuryDirect, the official online platform where I bonds are held. You log into your TreasuryDirect account, select the bond you want to cash, and request the redemption. The Treasury then deposits the money into the bank account you have on file, usually within a few business days.

The money you receive includes the bond's face value plus all the interest it has earned up to that point. You cannot partially cash an I bond — you redeem the entire bond or none of it. Once you request the redemption, the transaction cannot be reversed.

Key Takeaways

  • I bonds must be held for at least one year before you can cash them in, and if you cash them in before five years have passed, you lose the last three months of interest.
  • You redeem I bonds through your TreasuryDirect account online, and the money goes to your linked bank account within a few business days.
  • The amount you receive is the bond's face value plus all accrued interest, and you cannot cash in just part of a bond.
  • When you cash in an I bond, you owe federal income tax on the interest earned, though you may not owe it until the year you redeem it.

The one-year holding requirement and early redemption penalty

You cannot cash in an I bond during its first year of ownership. The Treasury requires a minimum one-year holding period before any redemption is allowed. If you try to redeem before that year is up, TreasuryDirect will not process the request.

If you redeem an I bond between one year and five years after purchase, you forfeit the last three months of interest. For example, if you bought an I bond on January 15, 2023, and cashed it in on March 20, 2024, you would receive the bond's face value plus interest through December 15, 2023 — the interest you earned in January, February, and March 2024 would be lost. After five years, you can redeem without this penalty.

How to access your I bonds on TreasuryDirect

To redeem an I bond, you need a TreasuryDirect account. If you already own I bonds, you should have one. Log in using your username and password, or create an account if you do not have one yet. You will need a Social Security number and a valid email address to set up an account.

Once logged in, look for the "Manage Direct" section or the area labeled "My Securities." This shows all the bonds you own, including their current value and the date you purchased them. Select the I bond you want to redeem and look for the "Redeem" or "Cash" option. TreasuryDirect will ask you to confirm the redemption and show you the exact amount you will receive.

Before you can redeem, you must have a U.S. bank account linked to your TreasuryDirect account. The Treasury deposits redemption money only to a checking or savings account in your name at a U.S. financial institution. If you have not linked a bank account yet, you will need to do that first.

What happens after you request the redemption

After you submit your redemption request on TreasuryDirect, the transaction is processed within one to three business days. The money is deposited directly into the bank account you specified. You will receive a confirmation number and a record of the transaction in your TreasuryDirect account.

The amount deposited includes the bond's face value (the amount you originally paid) plus all interest earned through the redemption date. If you redeemed before five years, the three-month interest penalty has already been subtracted from this amount. You do not need to do anything else — the money is yours to use.

Tax reporting when you cash in an I bond

When you redeem an I bond, you owe federal income tax on the interest you earned. The tax is not withheld automatically — you report it yourself when you file your tax return. The year you report the interest depends on when you bought the bond and when you cashed it in.

Most people report the interest in the tax year they redeemed the bond. For example, if you cashed in an I bond in March 2024, you would report the interest on your 2024 tax return. However, if you chose to report the interest each year while you held the bond, you report only the additional interest earned in the year of redemption.

The Treasury does not send you a 1099 form automatically. You can find the interest amount in your TreasuryDirect account under the bond's details. Keep this information for your tax records. State and local income taxes may also apply, depending on where you live.

Reasons people cash in I bonds early

Some people redeem I bonds before five years because they need the money for an emergency or unexpected expense. Others cash them in when interest rates drop significantly, since I bonds adjust their rate every six months and locking in a higher rate by redeeming and reinvesting is no longer possible once rates fall.

If you are considering early redemption, weigh the three-month interest penalty against your need for the money. If you are redeeming only a few months before the five-year mark, the penalty may be small. If you are redeeming much earlier, you lose a larger amount of interest, and it may be worth waiting if you can.

What you cannot do with I bonds

You cannot transfer an I bond to another person or sell it on a secondary market. I bonds are non-transferable — only the person whose Social Security number is on the bond can redeem it. If you want to give an I bond to someone else, you must wait until it matures (30 years after purchase) or redeem it yourself and give them the cash.

You also cannot use I bonds as collateral for a loan. Banks will not accept them as security because they cannot be transferred or seized. If you need to borrow money, you must explore other options.

Frequently Asked Questions

What if I lost my TreasuryDirect password?

Go to the TreasuryDirect login page and click "Forgot your password?" You will be asked to verify your identity using your Social Security number and email address. The Treasury will send you a link to reset your password. If you cannot verify your identity online, you can call TreasuryDirect customer service at 844-284-2676 for help.

Can I redeem an I bond over the phone or by mail?

No. TreasuryDirect only processes redemptions through its website. You cannot redeem by phone, mail, or in person at a bank. You must have internet access and a TreasuryDirect account to cash in your bond. If you do not have internet access, you can ask someone to help you log in and process the redemption on your behalf.

How long does it take to get the money after I redeem?

The Treasury deposits the money into your linked bank account within one to three business days of your redemption request. Your bank may take an additional one to two business days to make the funds available in your account. In total, expect the money to arrive within three to five business days.

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

You must redeem the entire bond. TreasuryDirect does not allow partial redemptions. If you own multiple I bonds, you can choose which ones to redeem and leave others untouched, but each bond you redeem must be cashed in completely.

What if I redeem an I bond and then change my mind?

Once you submit a redemption request on TreasuryDirect, the transaction cannot be reversed or cancelled. The bond is redeemed and the money is deposited into your bank account. If you regret the decision, your only option is to use the cash to purchase new I bonds if you wish.