Now comes the exciting part, learning how to cash in your savings bonds. Savings bonds are redeemed in different ways, depending on the type you own, but most can be redeemed at a bank or through TreasuryDirect.
When you’re ready to cash in an electronic Series EE or Series I savings bond, the process is relatively easy. To exchange your savings bond for cash, you log in to your account on TreasuryDirect and follow the instructions to redeem your bond. The cash value of the bond will be credited to your checking or savings account within 2 business days.
Cashing paper bonds, on the other hand, requires a bit more legwork. If you have a paper savings bond, you’ll need to bring the physical bond to a bank or financial institution. Don’t forget your photo ID when looking to exchange it for cash. It’s also a smart idea to call ahead and make sure that the institution you have in mind will actually be able to cash your savings bonds for you.
You should always check the value of your savings bonds before redeeming them for cash to ensure you receive the correct amount. Remember, you do have to wait at least 1 year after purchasing a savings bond to cash it in. The only exception to this rule is if you’re affected by a natural disaster.
It’s also important to keep in mind that the value of your bond will provide the most return if you wait until its maturity to cash it in. The longer you wait to cash in your bonds, the more interest you’ll earn.
Once you redeem your savings bond, the bank or TreasuryDirect will send you a Form 1099-INT for tax purposes. If you cash in a paper bond at a financial institution, it may even give you the form while you’re there. Since a savings bond’s interest is subject to federal income tax, you can choose to either report it and pay tax on it every year that you hold the bond or wait until the end and pay the tax all at once.