How to cash in savings bonds

When I was a child, my parents and Grandmother bought my siblings and I United States Savings Bonds for our college savings. It was a very generous gesture on their part and I redeemed my US Savings bonds when I went off to college, where they certainly came in useful.

When I was younger, I didn’t understand much about Savings Bonds, only that they were beautiful to look at and were worth a lot of money – or at least they would be worth a lot of money someday! And I think that just about sums up what most people know about US Savings Bonds – they look cool, and one day they will be worth a lot of money (since they are often purchased at less than face value). Hopefully, this primer will give you a better understanding of US Savings Bonds – what they are, and how they work.

Albert Einstein Series I US Savings Bond

For as long as most of us can remember, US Savings Bonds have been a safe place to save and invest money.  There may not be a great deal of growth opportunity in savings bonds or US Treasury Bonds when compared to some other investments, however, there is very little risk involved with these investments. When compared to a traditional savings account, the US savings bond ranks right up there as one of the safest savings tools available.

Savings bonds differ from savings accounts held in financial institutions which are insured by the FDIC in that they are backed by the United States government.  Popular as gifts for children, students and family members it becomes important for recipients to understand how and when to cash in their savings.  Here we look at how you can redeem US savings bonds to collect their cash value.

US Savings Bonds as Investments or Gifts

Savings bonds may be a good investment if you have the time and patience to let the bonds fully mature. When purchased in advance, they would be great for planning for retirement, saving for education, and giving as gifts for children.

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Savings bonds make a great gift for birthdays, weddings, graduations, and celebrating a birth. You can buy a bond for someone in either electronic or paper form. You must be 18 or older to purchase a bond electronically, but do not need to be 18 or older to receive a bond.

To gift a bond, you need to know the recipient’s full name, social security number, and Treasury Direct account number (if purchasing electronically). If purchasing at a financial institution, then you will need to fill out their form and will receive the paper bond usually in about three weeks which can be mailed to you or directly to the recipient of the US Savings Bond.

Ben Franklin Series EE US Savings BondBen Franklin Series EE US Savings Bond

How to Cash in US Savings Bonds

How Much Are US Savings Bonds Worth?

There are several ways to determine how much your savings bonds are worth.  US savings bonds can be taken to the bank to determine their current value or you can calculate the value by entering information regarding the savings bond into an online calculator.  Savings bond calculators can be found on several websites with one of the most popular being Treasury Direct which is brought to you by the US Department of Treasury Bureau of Public Debt.

Regardless of which option you choose to determine the value of your savings bonds, you will have to have the actual bonds in hand to get an accurate calculation.  When using the Treasury Direct website, you will be able to save the information in your own “inventory” should you want to revisit this information in the future.

Where Can You Redeem US Savings Bonds?

The first question asked by most savings bond owners is where they can redeem their savings bonds.

Most financial institutions, such as a bank or credit union, can handle the redemption of US savings bonds.  Contact your local bank before taking the bonds in for redemption to ensure they do in fact handle that sort of transaction.

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You will be asked to show a valid ID to prove ownership or if the bond is not in your name, proof that you are the rightful heir entitled to the savings bonds. So be sure to ask what documentation is required to confirm identification and ownership of the savings bond.

Electronic bonds which were purchased at TreasuryDirect can be redeemed by logging onto the website and following the on-screen directions.  Once redeemed, you can expect a credit reflecting the amount redeemed in your checking or savings account within one business day.

Special Considerations When Cashing in US Savings Bonds

Savings bonds must be held for at least one year before they can be cashed in.  It is not necessary to wait to redeem a savings bond until it matures. However, redeeming your savings bonds before it is five years old will result in the forfeiture of interest earned in the three month period prior to redemption.  Keep in mind that savings bonds are subject to taxation.  This includes estate, gift, inheritance and federal income tax on interest earned.  Savings bond owners can opt to defer interest reporting until the savings bond is redeemed or report interest annually as it accrues.

Another important factor to consider is the fact that savings bonds are non-transferable.  This results in special considerations for parents redeeming savings bonds owned by minor children or redeeming savings bonds when the owner is incapacitated.

Minor children who are old enough to understand and sign for the redemption can do so if they have identification accepted by the bank.  Savings bonds issued to children who are too young to participate in the redemption process may be cashed in by a parent or legal guardian who signs for the request of payment.

This signature on the back of the bond should certify that the parent is signing on behalf of the minor who is not old enough to understand the request.  Individuals who have Power of Attorney for a friend or relative who is unable to represent themselves can request a special form from the Treasury which addresses the special needs of this situation.

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Individuals who inherit savings bonds, manage their children’s savings bonds, or live outside of the United States may be required to take additional steps to redeem savings bonds.  Beneficiaries must present evidence that proves they are the rightful owner of the bond as well as a certified copy of the decedent’s death certificate.  Parents may redeem savings bonds issued to their minor children by requesting such action in writing.  Individuals living outside of the US can visit Treasury Direct for detailed instructions on how to redeem US savings bonds under a variety of circumstances.

For more information regarding US savings bonds and other securities, visit the official website of the U.S. Department of the Treasury Bureau of the Public Debt.


How to cash in savings bonds

1. Savings bonds bought through a financial institution

  • You can cash in savings bonds at any time at most financial institutions.
  • Take your certificate to a financial institution, along with personal identification.
  • You can get your money back in cash or have it deposited into your bank account.

2. Savings bonds bought through a payroll savings plan

  • Access your online account with Canada Savings Bonds, or
  • Call the Employee Information Line for payroll savings plans, toll-free at 1-877-899-3599. Arrange for the money to go directly into your bank account.

3. Savings bonds held in a Canada RSP or Canada RIF

Call the Canada Savings Bonds Customer Service Centre toll-free at 1-800-575-5151 to cash in your bonds.

Visit the Canada Savings Bonds website for more information on how to cash in your savings bonds.

2 key points

  1. If you cash in your CSB within 3 months of buying it, you won’t earn any interest.
  2. You can cash in a CPB at any time, but you will only get interest earned up to the last anniversary date of the bond.
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