What Happens After a Savings Bond Maturity Date?

Malcolm Tatum

Savings bonds are bonds issued by a government entity, typically the national treasury department of a particular nation. Bonds of this type are often considered safe investments, in that very little risk is taken on by the investor and the chances of earning a return at the point of savings bond maturity is extremely high. Along with the low risk, it is important to remember that certain events take place once the savings bond maturity date arrives, with the assessment of taxes being one of the more important of those events.

Once it reaches the maturity date, a savings bond does not earn any additional interest.
Once it reaches the maturity date, a savings bond does not earn any additional interest.

In most instances, the issuer of the savings bonds does not automatically notify investors when the bonds reach maturity. It is the responsibility of the investors to track the progress of the bonds and take steps to cash in savings bonds once they do reach full maturity. Cashing in the bonds is really in the best interests of the investor, since most bond series will not continue to accrue interest once the maturity date is reached. This means that the investor is no longer earning anything from the investment and would do well to cash in the bond and divert the funds into some other type of interest bearing account.

Along with the fact that no additional interest is earned once savings bond maturity is reached is the need to assess taxes on the total returns of the bond issue. Many national revenue agencies require that the interest be reported as income in the year that full maturity is reached, even if the holder has made no effort to redeem savings bonds in his or her possession. Depending on the total amount of earnings involved, failure to do so could lead to significant penalties and fees in later years, effectively wiping out any interest earned on the bond issues.

There are several ways to cash in savings bonds once the savings bond maturity date has arrived. In many nations, presenting the bonds at a local bank will make it possible to quickly redeem savings bonds, once proper identification has been submitted. Today, many nations that continue to issue savings bonds also make it possible to redeem the bonds online once they reach savings bond maturity, connecting directly with the treasury or other government department that originally issued the debt instruments. The web sites will include step by step instructions in how to cash savings bonds, including how long it will take for payment to be tendered once the transaction is approved.

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