How to Cash In a Bond Before or At Maturity

The basic steps to cash in a bond depend on what type you own and where you hold it

Cashing in a bond means converting it back to cash. The process differs sharply depending on whether you own a Treasury bond (issued by the U.S. government), a corporate bond (issued by a company), a savings bond (like Series EE or I bonds), or a bond held in a brokerage account. The timing also matters: you can cash in most bonds before they mature, but savings bonds have specific rules about when you can withdraw without penalty.

The fastest route is usually through the institution that holds your bond. If you bought it through a bank or brokerage, that's where you start. If you hold a paper savings bond, you'll need to visit a bank or the U.S. Department of the Treasury website. The entire process typically takes a few days to a week, depending on the bond type and your financial institution.

Key Takeaways

Treasury bonds held in a brokerage account can be sold immediately through your broker, but you'll receive the current market price, not the face value.
Series EE and I savings bonds held for less than five years incur a three-month interest penalty when cashed in early.
Paper savings bonds must be redeemed at a bank or through the U.S. Treasury's TreasuryDirect website, not sold on the open market.
Corporate bonds can be sold through a broker before maturity, but the price depends on current interest rates and the company's credit quality.
If you hold bonds in a retirement account like an IRA, cashing them in may trigger tax consequences depending on your age and account type.

Cashing in Treasury bonds through a brokerage account

If you own Treasury bonds in a brokerage account (at firms like Fidelity, Charles Schwab, or Vanguard), you sell them the same way you'd sell a stock. Log into your account, find the bond in your holdings, and place a sell order. The transaction settles in one business day, and the cash appears in your account shortly after.

The price you receive is the current market price, not the bond's face value. If interest rates have risen since you bought the bond, its market price will be lower. If rates have fallen, the price will be higher. This is why selling before maturity carries risk—you might receive less than you paid. If you hold the bond until maturity, you'll get the full face value regardless of rate changes.

Treasury bonds held in a regular taxable brokerage account are subject to federal income tax on the interest you've earned, but not state or local income tax. If the bond is in a tax-advantaged account like a traditional IRA or Roth IRA, different rules apply (see the retirement account section below).

Redeeming paper or digital savings bonds

Series EE bonds and Series I bonds come in two forms: paper bonds (physical certificates) and digital bonds (held in TreasuryDirect, the U.S. Treasury's online system). The redemption process differs slightly for each.

For digital savings bonds, log into your TreasuryDirect account, select the bond you want to redeem, and request the redemption. The Treasury deposits the funds into your linked bank account within a few business days. You can redeem digital bonds anytime after you own them, but if you cash in a Series EE or I bond before five years have passed, you lose the last three months of interest as a penalty.

For paper savings bonds, take the physical certificate to a bank where you have an account, or mail it to the Treasury Retail Securities Site in Parkersburg, West Virginia. You'll need to complete a form (FS Form 1522 for Series EE bonds, or the equivalent for Series I bonds) and provide identification. Processing takes two to four weeks by mail. Some banks will redeem paper bonds in person, but not all—call ahead to confirm.

Selling corporate bonds before maturity

Corporate bonds are sold through a broker, just like Treasury bonds. If you own them in a brokerage account, log in and place a sell order. The bond will sell at the current market price, which fluctuates based on the company's credit rating, current interest rates, and time to maturity.

If the company's credit quality has improved since you bought the bond, you may sell it at a premium (above face value). If the company's credit has deteriorated, the bond will trade at a discount. You'll pay a small commission to the broker for the sale, typically a few dollars per bond.

If you hold a physical corporate bond certificate, the process is more cumbersome. You'll need to contact a broker to sell it on your behalf, and the broker may charge a higher fee because the transaction is less routine. Most people avoid this by holding corporate bonds in a brokerage account from the start.

Tax consequences when cashing in bonds

Interest earned on bonds is taxable income in the year you receive it. For Treasury bonds, you owe federal income tax but not state or local tax. For corporate bonds, you owe federal, state, and local income tax on the interest.

Series I bonds and Series EE bonds have special tax treatment. You can defer reporting the interest until you redeem the bond, or you can report it each year as it accrues. If you use the bonds to pay for may have access to education expenses, you may be able to exclude the interest from taxable income entirely, though this requires meeting specific conditions and filing Form 8815 with your tax return.

If you sell a bond at a gain (for more than you paid), the gain is taxable as a capital gain. If you sell at a loss, you can deduct the loss, subject to limits on capital loss deductions. Keep records of what you paid for each bond so you can calculate the gain or loss accurately.

Cashing in bonds held in retirement accounts

Bonds in a traditional IRA or 401(k) are not taxed when you redeem them—the tax is deferred until you withdraw the money from the account. If you're under 59½ and withdraw from a traditional IRA, you'll owe a 10% early withdrawal penalty on top of income tax, unless you may have access to for an exception (such as a Roth conversion or a substantially equal periodic payment plan).

Bonds in a Roth IRA can be withdrawn tax-free if you've held the account for at least five years and you're at least 59½. If you withdraw before meeting these conditions, you'll owe taxes and penalties on the earnings portion of the withdrawal, though contributions can usually be withdrawn penalty-free.

If you hold bonds in a 403(b) or 457 plan, the rules are similar to a 401(k). Consult your plan administrator or a tax professional before redeeming bonds in a retirement account, because the tax and penalty consequences can be substantial.

What happens if you need cash before a bond matures

If you need the money before the bond's maturity date, you have options depending on the bond type. Treasury and corporate bonds can be sold immediately at the current market price. Savings bonds can be redeemed anytime, but you'll forfeit three months of interest if you cash in before five years have passed.

If selling the bond at a loss would be painful, consider other sources of cash first—a personal loan, a line of credit, or a withdrawal from a savings account. Selling a bond at a loss locks in that loss permanently, whereas holding it to maturity guarantees you'll recover the full face value (for savings bonds and Treasury bonds held to maturity).

Frequently Asked Questions

Can I cash in a bond anytime, or do I have to wait until it matures?

Treasury and corporate bonds can be sold anytime through a broker at the current market price. Savings bonds can be redeemed anytime, but Series EE and I bonds cashed in before five years incur a three-month interest penalty. If you hold a bond to maturity, you receive the full face value regardless of interest rate changes.

What's the difference between selling a bond and redeeming it?

Selling means you transfer the bond to another buyer at the current market price, which may be above or below face value. Redeeming means you return the bond to the issuer (or a bank, in the case of savings bonds) and receive its value. Treasury and corporate bonds are sold; savings bonds are redeemed.

Will I owe taxes when I cash in a bond?

Yes, you'll owe federal income tax on the interest earned. Treasury bonds are exempt from state and local tax. Corporate bonds are subject to all three. If you sell at a gain, the gain is taxable; if you sell at a loss, you can deduct it. Bonds in retirement accounts have different rules—consult a tax professional.

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

Bonds sold through a brokerage account settle in one business day, with cash available shortly after. Paper savings bonds redeemed by mail take two to four weeks. Digital savings bonds redeemed through TreasuryDirect take a few business days. Banks that redeem paper bonds in person may process them the same day.

What if I sell a bond and the price is lower than what I paid?

You've realized a capital loss. You can deduct this loss against other capital gains, or up to $3,000 of ordinary income per year (with unused losses carried forward). Keep records of your purchase price and sale price to calculate the loss accurately when you file your taxes.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.