Learn how much your savings bond is worth, when it stops earning interest and two ways to redeem it.

Many of us received savings bonds as kids, and it’s fair to say that at the time most of us weren’t very excited about them. After all, you can’t play with a bond. However the adults who gifted those bonds—often loving grandparents—knew how valuable they would be to our future selves. As adults, we can appreciate our elders’ foresight but many of us don’t know how bonds work and when to cash them. Here’s what you need to know.

What is a savings bond?

Savings bonds are considered one of the safest investments since they are backed by the U.S. federal government. When someone buys a bond, it serves as a loan to the U.S. Department of Treasury which uses the money to fund projects that include things like roads or support for veterans. The Treasury Department guarantees specific interest earnings on the bonds, to be paid when the bond is redeemed by its holder. Over the years several series of bonds have been issued, all designated by a letter code.

Some savings bond series are no longer issued and if you have one of these, it has matured and no longer earns interest. Retired bonds include Series A, B, C, D, E, F, G, H, J, and K. Holding on to bonds from these series means losing value due to inflation.

Currently, the Treasury issues two types of savings bonds: Series EE and Series I.

Series EE bonds issued after May 2005 earn a fixed rate; those issued before May 2005 earn a variable rate. All EE bonds earn interest for up to 30 years. Right now, the government guarantees that new EE bonds will double in value in 20 years.

Series I bonds are designed with two rates: a fixed rate and inflation rate. The fixed rates is exactly as it sounds—it remains the same over the life of the bond. The inflation rate is reset every six months. Like EE bonds, I bonds earn interest for up to 30 years.

To compare EE and I bonds side-by-side, check out this chart from TreasuryDirect.

How much is my savings bond worth?

To find out how much your savings bond is worth, head over to the TreasuryDirect Savings Bonds Calculator. You’ll be able to check the value of your bonds today and at future dates, as well as bond maturity dates.

When should savings bonds be cashed?

Technically, you can cash in a savings bond at any point but doing so before maturity date means missing out on interest earnings.

To get the maximum interest wait until the bond’s maturity date. Also, keep in mind that the bond doesn’t accrue any additional interest after it matures. At maturity, it’s best to cash it out. While you might earmark the money for something specific—such as a purchase or paying off a bill—you can also reinvest in another savings bond or a CD, or you could deposit it in an interest-bearing account like a savings account or money market account.

You can cash in a bond before it matures, but you might not want to. Here are the Treasury’s rules:

• EE and I bonds can be cashed any time after you’ve owned it for one year
• If you cash a bond in less than five years, you lose the last three months of interest

How to cash in a savings bond

Savings bonds can be cashed two ways: in person and online.

You can redeem a paper U.S. savings bond at any Consumers office if you are a member. You’ll want to get in touch with the office manager at your location so they can confirm which type of bond you have. Many other financial institutions offer this service but not all. To redeem a bond in person, bring in the bond and have your Social Security number and picture ID on hand. Also, if you’re cashing a bond as a beneficiary, a death certificate for the person named on the bond is required.

Online, TreasuryDirect allows bond holders to redeem savings bonds. If you have paper bonds, they’ll have to be converted to electronic bonds first. Learn how to convert EE or I paper bonds to electronic bonds here. When you redeem bonds through TreasuryDirect, funds will go directly to the money market, savings or checking account you designate. The transfer will take two business days.

 

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