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When Can You Cash in Savings Bonds?

When Can You Cash in Savings Bonds?
Austin Kilham
Austin KilhamUpdated July 10, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
You can cash in savings bonds once you have owned them for at least one year. U.S. Savings bonds are a safe place for you to put money you won’t need for at least a year and potentially earn a higher interest rate than you would in a savings account. Savings bonds are affordable and simple to buy and cash out, though there are some limitations you need to be aware of to help maximize your returns.    

What Is a Savings Bond?

A bond is a type of debt security issued by the federal government, state governments, and corporations to help fund projects such as building roads and hospitals or buying equipment needed to grow a business. Savings bonds are issued by the federal government. The program started in 1935 under President Franklin D. Roosevelt as a way to encourage Americans to save. They can play an important role in a savings plan and function as an alternative to holding cash in a savings accountWhen you buy a savings bond from the U.S. Department of the Treasury, you are essentially lending the government money. In return, they agree to pay you interest, also known as a coupon payment. When you cash out the bond after it has matured, the interest and the principal amount you paid for it is returned to you.Savings bonds are generally considered to be an extremely safe investment because they are backed by the U.S. government. It is highly unlikely that the government will default on its debt. Recommended: Savings Accounts vs Bonds Compared

Types of Savings Bonds

Over the years, there have been a variety of savings bonds depending on the government’s and investors’ needs. The Series E bond, for example, helped fund efforts to fight World War II. Today, investors can choose from two savings bonds: EE bonds and I bonds. 

EE Bonds

EE bonds are electronic only and can be stored in a TreasuryDirect account. They earn a fixed interest rate of 2.50% for bonds issued from May 1, 2023 to October 31, 2023.Investors can buy them in any amount from $25 to $10,000 with a maximum purchase of $10,000 per year. Investors can hold EE bonds for up to 30 years. They can be cashed out after one year, though investors who cash out before five years forfeit three months of interest. These bonds are guaranteed to double in value in 20 years. 

I Bonds

I bonds are designed to protect investors against inflation. They earn a fixed interest rate plus a rate set based on inflation that’s adjusted twice a year. For I bonds issued between May 1, 2023 and October 31, 2023, the current interest rate is 4.30%, which includes a fixed rate of 0.90%. I bonds can be held electronically or in the form of paper bonds. They may be purchased in amounts of $25, and investors can purchase up to $10,000 per year in electronic bonds and $5,000 per year in paper I bonds. As with EE bonds, I bonds can be held for 30 years and cashed out after one year. But those who cash out before five years will lose three months worth of interest. 

Should I Cash in My Savings Bonds?

Holding your savings bonds for the full 30-year term ensures that you maximize your returns. However, you may need your money before your bond fully matures. You can cash out your savings bond after just one year, but it is advisable to wait for at least five years so you don’t forfeit three months worth of interest. You may want to wait at least 20 years to cash your EE bonds, since they are required by law to double in value in that period. Recommended: Business Bank Account vs Personal Bank Account

How to Tell If Your Bonds Are Matured

A bond’s maturity date is the date on which the issuer is required to repay the investor’s principal. For many types of bonds, such as Treasury bills and corporate bonds, you can’t cash out early; you have to wait for the bond to reach its maturity before you get your principal back. Alternatively, you could sell the bond on the open market. However, the resale value of the bond may have increased or decreased since you first purchased it. Typically, if interest rates have increased since an investor purchased a bond, the bond's value will decrease, since purchasing new bonds provides investors with a higher interest rate. Falling interest rates, on the other hand, tend to increase the value of bonds on the secondary market. In any case, with savings bonds, you do not have to wait until a specific maturity date to cash them out. You must only hold the bond for one year. At the end of 30 years, the bond will expire and you’ll receive your principal back, plus interest, no matter what. 

Where to Cash in Savings Bonds

Where you can cash in your savings bond will depend on the type of bond you hold. You can cash I bonds at banks, while you can cash I bonds and EE bonds both through the Treasury Department. Not all banks will cash bonds. You’ll most likely have the best luck cashing in savings bonds at large, national banks. It may also be easier to cash in a bond at a bank where you are an account holder, though some banks may allow you to cash in a bond without an account. 

How to Cash in Savings Bonds

When cashing in, or redeeming, a bond at a bank, you’ll need to bring the paper bonds with you. Electronic bonds must be cashed with the U.S. Department of the Treasury. You’ll also need to bring a government ID, such as your driver’ license or passport. Finally, you’ll need to fill out a copy of Form 1522, which the bank can provide you. If you inherited the bond, you may need to provide a copy of the original owner’s death certificate. To cash in a bond with the Treasury Department, you’ll need to download and fill out Form 1522 and send the form to Treasury Retail Securities Services, P.O. Box 9150, Minneapolis, MN 55480-9150. If you’re redeeming a bond of $1,000 or more, you’ll need to sign your form in front of a notary or certifying officer. 

Early Withdrawal Penalties

The government incentivizes you to hang on to your savings bonds for the long term. If you cash in your bonds after five years, there’s no penalty. Cash them in before that and you’ll be dinged three month’s worth of interest. 

The Takeaway

Government savings bonds are a safe, easy, and accessible way to save money and earn interest. They do keep your money tied up for at least one year, but you can cash them out at any point after that. Hang on to them for at least five years to avoid early withdrawal penalties, and hold them for a full 30 years to maximize your return.If you want more freedom in accessing your cash, consider opening a savings account. High yield savings accounts may offer interest rates that are comparable to, or higher than, savings bond interest rates. They allow more freedom in when you can access your account, though there may be restrictions such as minimum account balances.  Compare high-yield savings accounts with Lantern by SoFi.

Frequently Asked Questions

How long do you have to keep savings bonds before cashing them in?
Do savings bonds expire after 30 years?
Can you cash in a savings bond at any bank?
Photo credit: iStock/jetcityimage

About the Author

Austin Kilham

Austin Kilham

Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.
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