Savings Bonds Investments Safe Investments Redeeming Bonds

U.S. Savings Bonds are one of the safest investments you can make. But the process of buying and cashing in bonds can sometimes be confusing. Bonds today no longer have to be purchased or redeemed at a bank or other financial institution, but can be bought and redeemed electronically online directly from the U.S. Treasury.

Bonds are a stable investment for a variety of reasons. Ultimately, they help keep the U.S. Government operating by providing funds and are secured by the government, which makes them safe. They also pay a conservative, yet respectable, interest rate. And best of all, no hidden fees are taken out of bond earnings, they are exempt from state or local taxes, and federal income taxes are deferred until the bond is cashed.

Types of Savings Bonds

There are several types of U.S. Savings Bonds in circulation: Series EE/E, Series HH/H, and I-Bonds, but only EE and I-Bonds are currently available for purchase. No matter what kind of bond you have, they can all be redeemed in basically the same ways.

When to Redeem

A U.S. Savings Bond can only be redeemed if it has been held for at least 12 months. It is ideal to hold bonds for at least five years before cashing them; otherwise, three months of interest will be forfeited. There are two exceptions: 1) the bond was inherited or 2) the bond is held in the name of a child who is too young to redeem it.

Where to Redeem

Most financial institutions will redeem paper bonds. If the bonds were purchased electronically, a paper bond is not issued and bonds can only be redeemed through the account from which they were purchased. The account requires a specific password and the account holder’s Social Security number to access it.

Once online bonds are redeemed, the Treasury will deposit the money into the bank account related to the bond account unless other arrangements have been made.

When cashing in paper bonds, proper identification, such as a valid driver’s license or other photo ID, is required to prove who owns the bond. (Some financial institutions also require that the bond holder have a bank account with them for at last six months to cash bonds.) If the bond was inherited, a death certificate is required at the time of redemption.

Only $1,000 worth of bonds can be redeemed at one time in person. To redeem more, the bond holder is required to sign the request for payment on the back of the bonds before a certifying officer at the bank and mail them to the local Treasury Retail Securities. Financial institutions can provide more information.

How to figure worth

It is easy to find out how much a bond is worth online. Just go to and enter the required information found on the specific bond into the Savings Bond Calculator and click on the “Calculate” button.

More about taxes

After bonds have been redeemed, the IRS will mail a tax form to the bond owner by the end of the tax year. The income from the bonds is considered long-term capital gains and must be reported on federal income taxes in the year the bonds were redeemed. If the bonds were a gift or inherited, the income could be subject to state and federal excise taxes. Check with a tax professional.

For more information about buying and selling bonds, visit