When to Cash in Savings Bonds

U.S. savings bonds are seen as one of the safest ways to invest one’s money. A savings bond is a government insured and backed investment that when held onto long enough, will pay out the interest earned with practically no risk of losing any money.

Usually a savings bond is a long term investment meaning that those purchasing savings bonds should be prepared to hold into the bond for many years to earn the maximum amount of interest possible on the bonds.

So when should you cash them in?

When you purchase a U.S. savings bond you’ll also be given information on how long you’ll have to wait before cashing in the bond and how long the bond will continue to earn interest. A good rule of thumb when deciding to cash in a bond is to determine if the bond is still earning any interest at all.

Many bonds issued after February 2003 are subject to a 6-12 month waiting (or holding period) before you can cash them in or redeem them. To get the most out of your savings bonds however you should allow them to fully mature and earn interest for as long as possible.

Most U.S. savings bonds continue to earn interest on them up to 30 years from the date they were issued. If you are holding onto savings bonds that are no longer earning interest, you are basically preventing that money from further growing.

If your bond has matured and is no longer earning interest, you’ll want to redeem it at your local bank. You’ll get the initial value of the bond plus the interest earned. You can then spend the money, use it to buy more bonds, or reinvest the money in a high interest savings account or whatever you’d like to do it.

Like most long term investments, it doesn’t pay to cash in early. If you are unsure of how old your bond is or if it is still accruing interest, you can check the status of your bonds by visiting the Treasury website at: http://www.treasurydirect.gov/ . You can also have savings bonds that you’ve lost or misplaced verified by the treasury, claim bonds left to you by a relative, and find out all the details about your savings bonds.

If you need the cash now and the bond isn’t subject to a holding period you can cash in your savings bonds immediately, but keep in mind that you may have to pay taxes on the interest earned and will lose out on all the potential interest that could have been earned.

Remember that if your bond is no longer earning interest there is no reason to keep holding it, bonds that are 30 years or older generally fall into this category of bonds. Cash them in if the interest earning period is over.