How to Cash in Savings Bonds: A Step-by-Step Guide for Maximum Returns

Savings bonds are a safe and secure way to grow your money over time, but there comes a time when you may need to cash them in.
Whether you need funds for an emergency, a major purchase, or simply want to reinvest your money elsewhere, understanding the process of redeeming your savings bonds is essential.
This guide will walk you through the steps of cashing in savings bonds, including eligibility requirements, where to redeem them, tax implications, and tips to maximize your returns.
1. Determine the Type of Savings Bonds You Own
Before cashing in your bonds, you need to identify their type. The most common U.S. savings bonds are:
- Series EE Bonds – Earns interest for up to 30 years and is typically guaranteed to double in value after 20 years.
- Series I Bonds – Adjusts for inflation, making them a popular choice for long-term savings.
- Older Bonds (Series E, H, HH) – Issued before 1980, some of these bonds may still be eligible for redemption.
Understanding your bond type is crucial because different bonds have different maturity dates, interest rates, and redemption rules.
2. Check If Your Bonds Are Eligible for Cashing
Savings bonds must be held for at least one year before they can be redeemed. However, if you cash in an EE or I bond before five years, you will lose the last three months of interest.
To check if your bond has matured:
- Use the TreasuryDirect Savings Bond Calculator on the U.S. Department of Treasury’s website.
- Look at the issue date on the bond and compare it to the maturity schedule.
Fully matured bonds (usually 30 years old) stop earning interest, meaning you should cash them in to avoid losing potential earnings.
3. Where to Cash in Savings Bonds
Depending on the type of bond, you have a few options for redeeming them:
Cashing Bonds at a Bank
- Most local banks or credit unions can redeem paper EE and I bonds.
- Bring a government-issued ID (e.g., passport or driver’s license).
- If cashing in over $1,000, some banks may require additional verification or a TreasuryDirect account.
Cashing Bonds Online via TreasuryDirect
- Electronic bonds (Series EE and I) must be cashed via TreasuryDirect.gov.
- Log in to your account, select “ManageDirect,” and request redemption.
- The funds will be deposited into your linked bank account within 1-2 business days.
Cashing Older Bonds (Series HH, E, H)
- Series HH bonds must be cashed directly through Treasury Retail Securities Services by mailing in the bonds along with a redemption request form (PD F 1522).
- Series E and H bonds (if still valid) may also require mailing to the Treasury.
4. Understand the Tax Implications
Savings bond interest is subject to federal income tax but exempt from state and local taxes. Before redeeming your bonds, consider the tax consequences:
- Interest is taxable in the year you cash the bond unless you have been reporting it annually.
- Education Tax Exclusion – If using bond proceeds for higher education expenses, you may be able to exclude interest from your taxable income.
- If you cash in a large amount, it may push you into a higher tax bracket, so plan accordingly.
The IRS will send Form 1099-INT for any interest earned, which must be reported on your tax return.
5. Maximize Your Bond Redemption Strategy
To get the most out of your savings bonds:
- Wait until the full maturity date to maximize interest earnings.
- Redeem strategically – if nearing the five-year mark, wait to avoid losing three months’ interest.
- Consider reinvestment – rolling funds into higher-yield investments can keep your money growing.
- Use for tax-free education savings – if eligible, avoid paying taxes on interest.
Cashing in savings bonds is a straightforward process, but knowing when and how to redeem them can help you maximize returns and minimize taxes.
Whether you’re withdrawing for an urgent need or reinvesting in better opportunities, following this guide will ensure you get the most value from your bonds.
Ready to cash in? Check your bonds, evaluate the tax impact, and choose the best redemption method for your needs!