You can cash in a Treasury bond through TreasuryDirect, a bank, or a broker, depending on when you bought it and what you need now
The method you use depends on whether you own the bond in TreasuryDirect (the U.S. Department of the Treasury's online platform) or in a brokerage account. If you bought it directly from the government through TreasuryDirect, you redeem it there. If a bank or broker holds it, you sell it through them. The timing matters too: you can redeem at maturity (when the Treasury pays you back) or sell before maturity (when you need the money sooner).
Redeeming at maturity is straightforward—the Treasury automatically deposits your principal and final interest payment. Selling before maturity means finding a buyer on the secondary bond market, which involves a broker and may result in a gain or loss depending on interest rates since you bought it.
Key Takeaways
- Bonds held in TreasuryDirect are redeemed directly through your account; bonds held at a bank or broker are sold through that institution.
- At maturity, the Treasury deposits your full principal and final interest payment automatically—no action required if your account information is current.
- To cash in before maturity, you must sell the bond through a broker on the secondary market, and the price you receive depends on current interest rates.
- Selling before maturity may result in a loss if interest rates have risen since you purchased the bond.
Redeeming a Treasury bond at maturity through TreasuryDirect
When your bond reaches its maturity date, the Treasury automatically redeems it and deposits the principal plus your final interest payment into the bank account linked to your TreasuryDirect account. You do not need to take any action—the process is automatic. The deposit typically arrives on the maturity date itself.
Before maturity arrives, log into your TreasuryDirect account and confirm that your bank account information is current and correct. If your linked account has closed or the routing number has changed, update it in your account settings. If the Treasury cannot deposit the funds because the account information is wrong, they will issue a check instead, which takes longer.
You can see your bond's exact maturity date in your TreasuryDirect portfolio. The date is set when you purchase the bond and does not change.
Selling a Treasury bond before maturity through a broker
If you need to cash in your bond before it matures, you must sell it on the secondary market through a broker. This is different from redeeming it—you are selling your bond to another investor, not returning it to the Treasury.
First, move the bond from TreasuryDirect to a brokerage account if it is not already there. You can do this by transferring it to a broker that accepts Treasury securities. Once the bond is in a brokerage account, you can place a sell order just as you would with a stock. The broker finds a buyer and executes the sale.
The price you receive depends on current interest rates. If rates have risen since you bought the bond, its value has fallen, and you will receive less than you paid. If rates have fallen, its value has risen, and you may receive more. The difference between what you paid and what you receive is your gain or loss.
Understanding secondary market pricing and timing
When you sell a Treasury bond before maturity, you are selling it at whatever price the market will pay on that day. Treasury bonds are actively traded, so there is usually a buyer, but the price fluctuates with interest rates.
The relationship is inverse: when the Federal Reserve raises interest rates, existing bonds become less attractive because new bonds pay higher rates. Older bonds with lower rates must be discounted to compete. The longer the bond's remaining time to maturity, the bigger the price swing tends to be.
Selling takes one to three business days to settle, depending on your broker. During that time, the price can move. Some brokers let you set a limit order—a minimum price you will accept—which protects you from selling at an unexpectedly low price if the market moves against you while your order is pending.
Cashing in a Treasury bond held at a bank
If your bank holds your Treasury bond in a custodial account, contact the bank's bond desk or customer service to initiate a redemption or sale. Banks typically charge a fee for this service, ranging from $25 to $100 or more, depending on the institution and whether you are redeeming at maturity or selling early.
Ask the bank whether the bond will be redeemed at maturity automatically or whether you need to request it. Some banks require written instruction; others process it automatically if your account is in good standing. If you want to sell before maturity, the bank will execute the sale through its broker and charge you a transaction fee.
Banks are generally slower than direct TreasuryDirect redemption or brokerage sales because they process requests during business hours and may require paperwork. If speed matters, a brokerage account is usually faster.
What happens to your interest payments while you hold the bond
Treasury bonds pay interest twice a year on a schedule set when you buy the bond. The interest is deposited directly into your linked bank account (if held in TreasuryDirect) or credited to your brokerage account (if held there).
When you sell a bond before maturity, you receive accrued interest—the interest earned since the last payment date—as part of the sale proceeds. You do not lose interest by selling early; you simply receive it as part of the sale price rather than waiting for the next scheduled payment.
Tax treatment of Treasury bond redemptions and sales
Interest from Treasury bonds is subject to federal income tax but exempt from state and local income tax. When you redeem or sell a bond, you owe federal tax on all interest received, whether it was paid to you directly or accrued and included in the sale price.
If you sell a bond for more than you paid, the gain is also subject to federal tax. If you sell for less than you paid, you have a capital loss, which may offset other investment gains. Keep records of your purchase price and sale price for tax reporting.
The Treasury and your broker will send you tax documents (Form 1099-INT for interest, Form 1099-B for sales) by January 31 of the following year. Use these when filing your tax return.
Frequently Asked Questions
What if I lose access to my TreasuryDirect account before maturity?
Contact TreasuryDirect customer service immediately. You can verify your identity and regain access, or request that they transfer the bond to a broker or bank. If you cannot regain access before maturity, the Treasury will still redeem the bond and attempt to deposit the funds into your linked account. If that account is no longer valid, they will issue a check to your address on file.
Can I redeem a Treasury bond early without selling it?
No. Treasury bonds cannot be redeemed early by the owner. You must either wait until maturity or sell it on the secondary market through a broker. Series EE savings bonds have different rules and can be redeemed after one year, but Treasury bonds do not have this option.
How long does it take to receive the money after I sell a Treasury bond?
The sale settles in one to three business days, depending on your broker. Once settled, the funds appear in your brokerage account and can be transferred to your bank account. TreasuryDirect redemptions at maturity deposit on the maturity date itself if your account information is current.
Will I owe taxes on the gain if I sell a Treasury bond for more than I paid?
Yes. The gain is subject to federal income tax. The interest portion is taxed as ordinary income, and any capital gain from selling above your purchase price is taxed as a capital gain. Keep your purchase confirmation and sale statement for tax reporting.
What if interest rates have dropped and my bond is now worth more than I paid?
You can sell it on the secondary market and pocket the gain. The buyer will pay a premium because the bond's interest rate is now higher than what new bonds pay. This gain is subject to federal tax, but it represents real profit from your investment.