Where and how you cash a bond depends on what type you own and whether it has reached maturity

The method for cashing in a bond differs sharply depending on whether you hold a paper bond, a digital bond, or a bond fund, and whether the bond has matured. Paper Series EE and Series I savings bonds issued before 2012 must be cashed at a bank or credit union that offers that service — not all do. Digital bonds and bonds purchased through TreasuryDirect can be redeemed directly through that platform. Corporate and municipal bonds held in a brokerage account are sold back to the market rather than redeemed with the issuer. The timing matters: cashing before maturity may trigger penalties or lock you into a lower rate, while waiting until maturity means no penalty but also no further growth.

Key Takeaways

  • Paper savings bonds must be cashed at a participating bank or credit union; call ahead to confirm they handle that bond type.
  • TreasuryDirect bonds are redeemed online through your account without visiting a bank.
  • Series EE and Series I bonds cashed before five years have passed forfeit the last three months of interest.
  • Corporate and municipal bonds are sold to another investor through a broker, not redeemed with the issuer.
  • Bond funds and bond ETFs are sold like stocks through your brokerage account at the current market price.

Cashing paper savings bonds at a bank or credit union

If you own physical paper Series EE or Series I bonds, you will need to visit a bank or credit union in person with the bonds and a valid photo ID. Not every bank handles savings bonds — call the institution first and ask whether they redeem that specific series. Some banks limit the number of bonds they will cash in a single day or charge a small fee, though many do not.

Bring the bonds themselves, your ID, and your Social Security number. The teller will verify the bond information, check that it has reached the minimum holding period if required, and issue you a check or deposit the funds directly to an account you hold at that institution. The transaction usually completes the same day. If you cannot locate a participating bank nearby, the U.S. Department of the Treasury's savings bond website includes a locator tool for banks in your area.

Redeeming bonds through TreasuryDirect online

Digital bonds purchased through TreasuryDirect — the U.S. Treasury's official platform — are redeemed entirely online without a bank visit. Log into your TreasuryDirect account, navigate to the "Manage Securities" section, and select the bond you want to redeem. Confirm the redemption, and the funds will be deposited into the bank account linked to your TreasuryDirect account within one to two business days.

This method is faster and more convenient than paper bonds, but you must have set up a TreasuryDirect account and linked a bank account before you can redeem. If you inherited bonds or received them as a gift and do not have a TreasuryDirect account, you will need to open one first — the process takes about 10 minutes and requires a Social Security number and a valid U.S. bank account.

Early redemption penalties for savings bonds

Series EE and Series I savings bonds carry a penalty if you cash them before holding them for five years: you lose the last three months of interest. This means if you redeem a bond after four years and nine months, you receive interest only through month nine, not month 57. After five years, there is no penalty, and you receive all accrued interest through the redemption date.

The five-year holding period applies to the date you purchased the bond, not the date you received it as a gift or inherited it. If you are unsure when your bond was issued, the issue date is printed on the bond itself or shown in your TreasuryDirect account. Plan your redemption around this date if you want to avoid forfeiting interest.

Selling corporate and municipal bonds before maturity

Corporate bonds and municipal bonds held in a brokerage account are not redeemed with the issuer — they are sold to another investor through your broker. The price you receive depends on current market conditions, not the bond's face value. If interest rates have risen since you bought the bond, you will receive less than you paid. If rates have fallen, you may receive more.

To sell, log into your brokerage account, find the bond in your holdings, and place a sell order just as you would for a stock. The transaction settles in one to three business days, and the proceeds are deposited into your cash account. Your broker will report the sale to the IRS, and you will owe capital gains tax on any profit (or can claim a loss if you sold for less than you paid).

Redeeming bond funds and bond ETFs

Bond mutual funds and exchange-traded funds (ETFs) do not have a maturity date and cannot be redeemed with the fund company. Instead, you sell your shares through your brokerage account at the current market price, the same way you would sell stock. The price fluctuates daily based on the value of the bonds held inside the fund.

Selling a bond fund is immediate — the order executes during market hours — and the cash settles in one to three business days. If you have held the fund for more than one year, any gain is taxed as a long-term capital gain. If you sell within one year, the gain is taxed as ordinary income. Check your fund's prospectus or your brokerage statement to confirm the current price per share before you sell.

What happens to your money after redemption

Once a bond is redeemed, the funds are deposited into a bank account (for savings bonds) or a brokerage cash account (for corporate, municipal, or fund shares). The money stops earning interest immediately. If you do not have a specific use for the funds, consider where to hold them while you decide: a high-yield savings account, a money market account, or a short-term CD may offer better returns than a regular savings account while you plan your next move.

Keep records of the redemption date and the amount received for tax purposes. If you redeemed bonds at a loss or at a gain compared to what you paid, you will need that information when you file your tax return.

Frequently Asked Questions

Can I cash a bond before it matures?

Yes. Savings bonds can be cashed anytime after one year, though cashing before five years means losing the last three months of interest. Corporate and municipal bonds can be sold anytime through a broker at the current market price, which may be higher or lower than what you paid.

What if I lost my paper bond?

Contact the U.S. Department of the Treasury's Bureau of the Fiscal Service with the bond's serial number and issue date. They can issue a replacement, though the process takes several weeks. If you cannot locate the serial number, bring any documentation you have (purchase receipt, old statements) to a bank that handles savings bonds.

Do I owe taxes when I cash a bond?

Yes, on the interest earned. For federal tax purposes, you owe income tax on the interest accrued from the purchase date to the redemption date. Some states do not tax savings bond interest, but most do tax corporate and municipal bond interest. Check your state's rules and keep your redemption statement for your tax file.

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

Paper bonds cashed at a bank typically deposit the same day. TreasuryDirect transfers take one to two business days. Brokerage sales settle in one to three business days depending on the security type and your broker's processing time.

What if the bank says they do not redeem that bond type?

Call another bank or credit union in your area — the Treasury locator tool can help you find one nearby that does. If no local bank participates, you can mail the bond to the Federal Reserve Bank serving your region with a redemption form, though this takes longer and carries the risk of loss in transit.