Where you cash a bond depends on what kind you own

The method for cashing a bond is different for Treasury bonds, savings bonds, corporate bonds, and municipal bonds — and the place you go varies by type. Treasury bonds and savings bonds go through the U.S. Department of the Treasury or an authorized bank. Corporate and municipal bonds go through your brokerage account or a bank that holds them. Before you cash any bond, check the maturity date and whether there are penalties for early redemption; some bonds lock your money in until a set date, and selling before that date may cost you.

The fastest route is usually the one where you already hold the bond. If you own it in a brokerage account, you sell it there. If you own a paper savings bond, you take it to a bank. If you own a Treasury bond held electronically, you log into your Treasury Direct account. Each method takes a different amount of time and may have different fees.

Key Takeaways

  • Treasury bonds and savings bonds are cashed through the U.S. Department of the Treasury, Treasury Direct, or an authorized bank, depending on how you hold them.
  • Corporate and municipal bonds are sold through a brokerage account or a bank that holds them as a custodian.
  • Paper savings bonds require you to visit a bank in person with the bond certificate and a form of identification.
  • Electronic bonds held in Treasury Direct or a brokerage account can be redeemed or sold online without visiting a physical location.
  • Cashing a bond before its maturity date may trigger a penalty or loss of accrued interest, depending on the bond type and terms.

Cashing U.S. Treasury bonds through Treasury Direct

If you own a Treasury bond held electronically in a Treasury Direct account, you redeem it online. Log into your account at treasurydirect.gov, navigate to the "Manage My Securities" section, and select the bond you want to redeem. The system will show you the current value and any accrued interest. Confirm the redemption, and the funds will be deposited into the bank account linked to your Treasury Direct account within one to three business days.

Treasury Direct accounts are free to open and hold. You do not need a broker or bank to manage them. However, Treasury Direct only lets you buy new Treasury securities directly from the government — you cannot sell existing bonds through Treasury Direct to another buyer. You can only redeem them back to the government at face value plus accrued interest on the maturity date or, for some Treasury bonds, on call dates set by the Treasury.

Selling Treasury bonds before maturity through a bank or broker

If you want to cash a Treasury bond before it matures, you must sell it on the secondary market through a bank or brokerage firm. This is the only way to convert a Treasury bond to cash before the maturity date. Contact your bank's bond desk or log into your brokerage account and place a sell order for the bond. The price you receive depends on current interest rates and market demand — if rates have risen since you bought the bond, you may receive less than you paid.

The sale typically settles within one to three business days, and the proceeds are deposited into your account. Banks and brokers may charge a commission or markup on the sale, usually between $10 and $50 per bond, though some firms charge a percentage of the sale price instead. Ask about fees before you sell.

Redeeming paper savings bonds at a bank

Paper savings bonds — Series EE, Series I, or older Series — are redeemed in person at a bank. Bring the bond certificate and a government-issued photo ID (driver's license, passport, or state ID). The bank will verify the bond, calculate the current value including accrued interest, and issue you a check or deposit the funds directly into your account if you have one at that bank.

Most banks redeem savings bonds for free, though some may charge a small fee. Call ahead to confirm the bank will redeem the specific series you hold; not all banks redeem all series. If your bank will not redeem it, the U.S. Department of the Treasury's Bureau of the Fiscal Service can direct you to another location or process the redemption by mail. The process by mail takes longer — typically four to six weeks — because the Treasury must verify the bond and process the payment.

Selling corporate and municipal bonds through a brokerage account

Corporate and municipal bonds held in a brokerage account are sold the same way stocks are. Log into your account, find the bond in your holdings, and place a sell order. The order goes to the bond market, and when a buyer is found, the sale settles within one to three business days. The price you receive depends on current interest rates, the issuer's credit rating, and market conditions — not on the price you paid.

Brokerage firms charge a commission on bond sales, typically $10 to $50 per bond or a percentage of the sale price. Some firms offer commission-free bond trading, but they may charge a markup on the price instead. Compare the total cost across firms before you sell. If the bond is held in a custodial account (such as an account managed by a financial advisor), contact the custodian to initiate the sale.

Understanding early redemption penalties and call dates

Some bonds, especially corporate and municipal bonds, include a call provision that allows the issuer to redeem the bond before maturity. If a bond is called, you receive the call price (usually par value or slightly higher) on the call date, and the bond stops earning interest. Check your bond documents or contact your broker to learn about your bond is callable and when the call date is.

If you try to sell a bond before its maturity date and the bond has a call provision, the price you receive may be lower than expected because the buyer factors in the risk that the issuer will call the bond. Some bonds also have a lockup period during which they cannot be sold or redeemed; attempting to cash them early may result in a loss of principal or accrued interest. Always review the bond's prospectus or terms before cashing it early.

What happens to accrued interest when you cash a bond

When you cash or sell a bond, you receive the principal (the amount you invested) plus accrued interest — the interest earned from the last interest payment date up to the settlement date. The accrued interest is taxable as ordinary income in the year you receive it, even if you held the bond for only a few days. For Treasury bonds, the interest is exempt from state and local income tax but subject to federal tax.

If you sell a bond on the secondary market for more or less than you paid, that gain or loss is also taxable. A gain is taxed as a capital gain; a loss can be deducted as a capital loss. Keep records of the purchase price, sale price, and settlement date for tax reporting. If you are unsure how to report the transaction, consult a tax professional.

Frequently Asked Questions

Can I cash a bond before the maturity date?

Yes, but the method and cost depend on the bond type. Treasury bonds can be sold on the secondary market through a bank or broker, but you will receive the current market price, which may be less than face value if interest rates have risen. Savings bonds can be redeemed early, but you may forfeit the last three months of interest. Corporate and municipal bonds can be sold through a brokerage account at the current market price.

How long does it take to get the money after I cash a bond?

If you redeem a bond electronically through Treasury Direct or a brokerage account, the funds typically arrive within one to three business days. If you redeem a paper savings bond at a bank, you may receive the money the same day or within a few days. If you mail a paper bond to the Treasury, allow four to six weeks for processing and payment.

Will I owe taxes on the interest I receive when I cash a bond?

Yes, accrued interest is taxable as ordinary income in the year you receive it. For Treasury bonds, the interest is exempt from state and local tax but subject to federal tax. If you sell a bond for more than you paid, the gain is taxed as a capital gain. If you sell for less, the loss can be deducted as a capital loss. Consult a tax professional about your specific situation.

What if I lost my paper savings bond certificate?

Contact the U.S. Department of the Treasury's Bureau of the Fiscal Service with details about the bond (series, denomination, and approximate issue date). The Treasury can search its records and issue a replacement or process a claim. The process takes several weeks. You will need to provide proof of ownership, such as a purchase receipt or bank record.

Can I cash a bond if someone else's name is on it?

If the bond is registered in your name or as a co-owner, you can cash it. If it is registered only in someone else's name, you cannot cash it without their permission or a legal document (such as a power of attorney or court order) authorizing you to act on their behalf. If the bond owner has died, the executor or administrator of the estate can redeem it with a copy of the death certificate and proof of their authority.