You can cash a savings bond once it reaches its issue date, but the timing and penalties depend on the bond type and how long you have held it

A savings bond cannot be cashed the moment you buy it. Series EE bonds and Series I bonds must be held for at least one year before you can redeem them at all. If you cash either type before five years have passed, you lose the last three months of interest as a penalty. After five years, you can cash them without penalty whenever you choose.

Series HH bonds (no longer sold but still held by many people) work differently — they pay interest every six months and can be cashed after six months, though early redemption also costs you three months of interest. The rules are strict and do not change based on your reason for needing the money, so timing matters if you want to avoid losing earnings.

Key Takeaways

  • Series EE and Series I bonds require a one-year holding period before any redemption is possible.
  • Cashing a bond before five years have passed costs you the last three months of accrued interest, regardless of the reason.
  • After five years, you can redeem your bond at any time without penalty and receive full accrued interest.
  • You redeem bonds through your bank, a credit union, or the U.S. Treasury's TreasuryDirect website, depending on where you hold them.

The one-year minimum hold period

You cannot cash a Series EE or Series I bond during its first year of ownership. This rule applies to every bond, without exception. If you purchase a bond on March 15, 2024, the earliest you can redeem it is March 15, 2025.

This waiting period exists because the Treasury wants to discourage short-term trading and ensure bonds serve their intended purpose as longer-term savings vehicles. It also means you should not buy a savings bond if you know you will need the money within twelve months — a high-yield savings account or money market account will serve you better.

The five-year interest penalty

If you redeem your bond between one year and five years after purchase, you forfeit the last three months of interest you have earned. This penalty applies to both Series EE and Series I bonds. For example, if you hold a bond for two years and have earned $50 in interest, you receive only $37.50 when you cash it.

The penalty is automatic — you do not have to do anything to trigger it, and there is no way to avoid it by cashing the bond on a specific date. The Treasury calculates your accrued interest and subtracts three months' worth before sending you the redemption amount. After five years have passed since the issue date, this penalty disappears entirely.

What happens after five years

Once your bond reaches its five-year anniversary, you can redeem it at any time and receive the full amount of accrued interest with no penalty. A Series EE bond issued on June 1, 2019, can be cashed on June 1, 2024, or any day after that without losing interest.

Bonds continue to earn interest for up to 30 years (Series EE) or 30 years (Series I), so you are not required to cash them at the five-year mark. Many people hold bonds longer specifically because they want the continued interest earnings. The five-year rule simply means that if you do decide to cash the bond, you will not be penalized for doing so.

Where to redeem your bond

The place you redeem your bond depends on where you hold it. If you own a paper bond, you take it to your bank or credit union along with your ID and sign the back. The institution will verify the bond and process the redemption, usually within a few business days. Not all banks accept bond redemptions, so call ahead.

If you hold your bond in TreasuryDirect (the Treasury's online system), you log into your account, select the bond you want to redeem, and request the redemption. The money is deposited into your linked bank account within a few business days. TreasuryDirect redemptions are faster and do not require a trip to the bank.

If you inherited a bond or received one as a gift and it is not yet registered in your name, you will need to have it reregistered before you can redeem it. This process takes additional time and requires paperwork, so contact the Treasury or your bank for the specific steps.

Series HH bonds and older bond types

Series HH bonds, which the Treasury stopped issuing in 2004, can be redeemed after six months of ownership. However, the same three-month interest penalty applies if you redeem before five years have passed. These bonds pay interest every six months by check or direct deposit, so you may have already received some of your earnings before you redeem.

If you hold bonds issued before 1974, they may have different rules or may no longer be earning interest. The Treasury's website has a bond search tool where you can look up the specific terms of older bonds. Some very old bonds may have stopped earning interest decades ago, so it is worth checking before you assume your bond is still growing.

What to do if you need the money before five years

If you must cash a bond before the five-year mark, you will lose three months of interest — that is unavoidable. However, you can still redeem it as long as it has been at least one year since you purchased it. The decision is whether the remaining interest you will receive is worth more to you than the cash you need now.

If you have not yet reached the one-year mark, you cannot redeem the bond at all through normal channels. Your only option is to contact the Treasury directly to discuss your situation, though they cannot waive the one-year rule. In genuine hardship cases, some financial institutions may offer loans against the bond's value, but this is rare and comes with its own costs.

Frequently Asked Questions

Can I cash a savings bond at any bank?

Not all banks redeem savings bonds. Call your bank first to confirm they offer this service. If they do not, try a credit union or visit a Federal Reserve Bank branch. TreasuryDirect redemptions can be done online from any computer, so that is always an option if your bank declines.

What happens if I lose a paper savings bond?

Contact the Treasury immediately and report it lost or stolen. You will need to file a claim and provide proof of purchase (like a receipt or bank statement). The Treasury can issue a replacement bond, but the process takes several months. Register your bonds in TreasuryDirect to avoid this problem in the future.

Do I have to pay taxes when I cash a savings bond?

Yes. The interest you earn on a savings bond is subject to federal income tax. You report it on your tax return in the year you redeem the bond. State and local taxes do not apply to savings bond interest. If the bond was issued after 1989 and used for education, you may be able to exclude some or all of the interest from taxes.

Can I redeem a bond someone gave me as a gift?

Yes, but only if the bond is registered in your name or if you are listed as a co-owner. If it is registered only to the person who gave it to you, you will need to have it reregistered in your name first. Contact the Treasury or your bank for reregistration instructions, as this adds time to the process.

What if my bond has stopped earning interest?

Series EE bonds earn interest for 30 years, and Series I bonds earn interest for 30 years. After that, they stop growing. If your bond has reached its final maturity date, redeem it as soon as possible — there is no benefit to holding it any longer. Check the Treasury's website or your bond documents to find your bond's maturity date.