What is the Procedure for Cashing Savings Bonds?

Savings bonds are small-denomination, non-marketable notes issued by the United States Treasury Department to allow participation by individuals in the financing of the federal government. Savings bonds may be purchased at banks, through the US Treasury’s Web site, or via certain other facilities. Investors receive their return on their original purchase by cashing savings bonds. They will need to know the series of the bond, have appropriate identification, and visit the correct banking or government facility. Beneficiaries of bondholders need to present additional documentation when cashing savings bonds of the deceased.

Savings bonds are issued in series, usually designated by a capital letter or two. EE and E bonds are redeemable at most banks or other local financial institutions, up to a limit per session after they have been held for a minimum time. Larger amounts may be redeemed by mail or by a bank if the bondholder is a resident of areas impacted by certain natural disasters. The bondholder must be known at the financial institution and have had an open, active account for six months or provide picture ID, such as a driver’s license.

Series I bonds may be redeemed at local financial institutions, by mail, or online. Bondholders must redeem the bonds online if they were purchased online. E, EE, and I bonds all are subject to interest penalties if redeemed early. HH bonds are forwarded to the Treasury Retail Securities Site by a local financial institution where the bondholder has a direct deposit account to receive the funds. Most of the remaining savings bond series must be redeemed at a Treasury Retail Securities Site by mail or in person at a Federal Reserve Board regional office.

Cashing savings bonds is indicated when the bond is no longer earning interest, or very low interest rates are applied and better uses of the funds are available. Other reasons that may necessitate cashing savings bonds include college expenses, unexpected costs, or as a deposit or investment on a more valuable asset. No stated reason is required to cash saving bonds, however.

Owners of bonds usually specify one or more beneficiaries who will assume ownership of the bond should the owner die prior to redemption of the bond. Beneficiaries cashing savings bonds of the deceased will need to provide a certificate of death as well as their own documentation. The state assumes ownership of bonds of people who did not indicate a beneficiary or complete a will. US Treasury Direct provides useful interest calculators and other information to help investors when cashing savings bonds.