Savings bonds are government-issued bonds that earn interest over a specific length of time – typically 20 to 30 years. As one of the safest investment vehicles, bonds are an excellent way to grow your personal savings at a fixed rate. They have a face value between $25 and $10,000, which makes them accessible to anyone looking for an additional savings option. Maybe you purchased or received savings bonds as a gift and you’re interested in redeeming them. Fortunately, redeeming or cashing in a savings bond is a simple and straightforward process.
Wait At Least Five Years
Savings bonds are not redeemable within the first year of purchase. A savings bond earns interest for up to 30 years, and keeping a bond until it matures is the best way to maximize your earnings. If you decide to redeem your bond before full maturity, wait at least five years. You can cash in sooner, but if the bond is less than five years old, you will lose three months interest.
Determine Whether You’re Eligible to Redeem the Bond
Bonds are non-transferable and you can only redeem a bond if your name appears on the certificate. However, there are a couple exceptions to this rule. For example, if a bond owner dies and you are the beneficiary, you can redeem the bond at a bank or credit union. Understand, however, that you need to provide a copy of the death certificate, as well as proof of your beneficiary status. You can also redeem bonds belonging to your young children. You must certify on the bond that you are the child’s legal guardian and that he is unable to redeem the bond himself.
Take the Bond to a Bank
If you have savings bonds in a certificate form, you can bring this certificate to any bank or credit union, as long as the financial institution is federally registered. Banks and credit unions have different requirements for cashing in or redeeming a savings bond. Call the bank ahead of time to avoid any slow downs. Identification is required to redeem bonds, with banks requesting a driver’s license and a Social Security card. If you are unable to locate a bank that will cash your bond, you can mail the bond to a branch of the Federal Reserve Bank. Call the bank first to familiarize yourself with the procedure. Unfortunately, some banks will only let you redeem $1,000 at a time.
Redeem Bonds Online
If you have an electronic savings bond, you can redeem this bond online through the United States Treasury. Visit TreasuryDirect.gov to cash in your bond. You can submit a request to have proceeds deposited directly into your bank account, or request a check from the Treasury. And if you have paper bonds, you can convert these bonds to electronic form through the Treasury.
Although a savings bond earns interest on an annual basis, this interest is tax-free until redemption. Interest income from a savings bond must be reported to the IRS on federal form 1040.