Where to cash your bond depends on the type and who issued it

You can cash a savings bond at most banks and credit unions, but the exact process depends on whether you have a paper bond or a digital one held online. Paper bonds issued by the U.S. Treasury can be cashed at your bank's teller window, while bonds held in the Treasury's online system (TreasuryDirect) must be redeemed through that website. Some bonds have maturity dates or waiting periods before you can cash them without penalty, so the first step is confirming what type of bond you own and how long you've held it.

The Treasury stopped issuing paper savings bonds in 2011, so if your bond is paper, it was issued before that year. If you bought a bond more recently, it exists only as a digital record in your TreasuryDirect account. Both types can be cashed, but the method and timing rules are different.

Key Takeaways

  • Paper savings bonds can be cashed at your bank or credit union; digital bonds must be redeemed through TreasuryDirect online.
  • Series EE and Series I bonds held for less than five years incur a penalty of the last three months of interest, so waiting longer saves money.
  • You need the bond's serial number and your Social Security number to redeem a digital bond, and the money typically arrives in your bank account within two business days.
  • Paper bonds require your ID and the bond itself; the bank will verify the bond's value before paying you.
  • Bonds continue earning interest after their initial maturity date, so older bonds may be worth significantly more than their face value.

Cashing a paper savings bond at your bank

Bring the physical bond and a government-issued ID to your bank's teller window. The teller will look up the bond's current value using the serial number printed on the certificate. This value includes all interest earned since you bought it. You do not need to have an account at that bank to cash a savings bond there, though some banks may require you to be a customer.

The bank verifies the bond is genuine and that you are the registered owner or an authorized representative. If the bond is registered to someone else, you will need a power of attorney or proof that you are cashing it on their behalf. The teller will then pay you the full current value in cash or deposit it into an account you specify.

If you cannot find the original bond certificate, you can request a replacement from the Treasury, though this takes several weeks. You will need to provide proof of ownership, such as purchase records or bank statements showing the original purchase.

Redeeming a digital bond through TreasuryDirect

Log into your TreasuryDirect account at treasurydirect.gov using your username and password. Navigate to the "Manage My Securities" section and select the bond you want to redeem. The system will show you the bond's current value, including all accrued interest. Click the option to redeem or cash the bond and confirm the transaction.

The money will be deposited directly into the bank account you have linked to your TreasuryDirect account. This typically takes one to two business days. You will receive a confirmation number and can check the status of your redemption in your account history.

If you have forgotten your TreasuryDirect password, you can reset it on the login page. If you no longer have access to the email address associated with your account, you will need to contact Treasury customer service by phone or mail to regain access before you can redeem your bonds.

Understanding the early redemption penalty

Series EE and Series I savings bonds carry a penalty if you cash them before five years have passed: you lose the last three months of interest. This means if you redeem a bond at four years and eleven months, you receive the value as of four years and nine months instead. After five years, you can cash the bond without any penalty.

This rule applies to both paper and digital bonds. If you are considering cashing a bond that is close to the five-year mark, calculate whether waiting a few months will net you more money. For Series I bonds, which earn interest tied to inflation, the interest rate changes every six months, so the last three months of interest may be higher or lower depending on when you redeem.

Bonds held past their maturity date continue to earn interest at the rate set by the Treasury. An older bond may have earned interest for 20 or 30 years, making it worth far more than its face value. There is no penalty for cashing a bond after maturity, and no deadline by which you must redeem it.

What happens to taxes when you cash a bond

The interest you earn on a savings bond is subject to federal income tax but not state or local income tax. You do not pay tax when you cash the bond; instead, you report the interest earned on your federal tax return for the year you redeem it. The amount of interest is the difference between what you paid for the bond and what you received when you cashed it.

If you bought a bond for $50 and cashed it for $75, the $25 difference is taxable interest. You will report this on your Form 1040 or other tax return. If you held the bond for many years, the interest may be substantial, so plan accordingly when you redeem a large bond or multiple bonds in the same year.

Some people use a strategy called "tax-deferred interest accrual" by holding bonds until retirement, when their tax bracket may be lower. You can also transfer a bond to a beneficiary, and they will owe tax on the interest earned during their ownership, not the interest earned before they inherited it.

What to do if your bond is lost or destroyed

Contact the Treasury's Bureau of the Fiscal Service to report a lost or damaged paper bond. You will need to provide the bond's serial number, the date you purchased it, and the amount you paid. The Treasury can issue a replacement bond, though this process takes several weeks and requires you to prove ownership through documentation like purchase receipts or bank statements.

For digital bonds in TreasuryDirect, there is no risk of loss because they exist only in your online account. If you lose access to your account, you can recover it by resetting your password or contacting Treasury customer service.

If a paper bond was damaged in a fire, flood, or other disaster, the Treasury may still honor it if enough of the certificate remains legible to verify the serial number and other key details. Bring what remains of the bond to your bank and ask whether they can process it.

Cashing bonds on behalf of someone else

If you are cashing a bond registered to another person, you will need legal authority to do so. This can take the form of a power of attorney, guardianship papers, or proof that you are the executor of their estate. The bank or TreasuryDirect will ask to see these documents before processing the redemption.

If the bond owner has passed away, you may need to go through probate or provide a death certificate and proof of your relationship to the deceased. Some banks will cash a bond for a surviving spouse or child without formal probate if the amount is small, but this varies by institution and state law. Contact your bank first to ask what documentation they require.

For digital bonds, the deceased person's TreasuryDirect account will eventually be closed, and you will need to work with the Treasury directly to redeem any remaining bonds. This typically requires a death certificate and proof that you are authorized to act on the account.

Frequently Asked Questions

Can I cash a savings bond before it reaches maturity?

Yes, but Series EE and Series I bonds redeemed before five years incur a penalty: you lose the last three months of interest. After five years, you can cash them without penalty. Other bond types have different rules, so check your bond's terms.

What if my bank won't cash my savings bond?

Some smaller banks do not cash savings bonds. If your bank declines, try another bank in your area or contact the Treasury directly. You can also redeem a digital bond through TreasuryDirect without involving a bank.

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

For digital bonds redeemed through TreasuryDirect, the money arrives in your linked bank account within one to two business days. For paper bonds cashed at a bank, you typically receive the money immediately or within one business day.

Do I need to report the interest from a savings bond on my taxes?

Yes. The interest earned on a savings bond is subject to federal income tax. You report it on your tax return for the year you redeem the bond. State and local income tax does not apply to savings bond interest.

What is the current value of my old savings bond?

You can look up the value of a paper bond using the Treasury's Savings Bond Calculator at treasurydirect.gov. You will need the bond's series, denomination, and issue date. For digital bonds, log into TreasuryDirect to see the current value in your account.