- You can withdraw a savings bond at a bank or through the US Department of the Treasury.
- Savings bonds earn interest for 30 years, but you can cash them after five years without paying a penalty.
- Not all banks draw on capitalization bonds, and some require you to already have an account with the institution.
President Franklin D. Roosevelt started savings bonds in 1935. Since then, bonds have become commonplace investments, especially for people who want a guaranteed rate of return.
If you have a savings bond, you can cash it now. The process will depend on the type of bond you own, how long you’ve held it, and which bank you use.
How does a savings bond work?
Capitalization bonds are debt securities that allow the government and other entities to leverage debt to finance business projects and increase the return on those investments.
So when you buy a savings bond through the US Department of the Treasury, you are essentially lending money to the government. In return, you receive a low-risk bond that offers periodic earnings in the form of coupon payments for up to 30 years – and a return on the principal amount you purchased the bond for when it matures.
When you’re ready to collect your bond money, you can probably cash it in – or “redeem” it – at a bank. However, the exact process depends on your situation.
How to withdraw savings bonds
There are two ways to withdraw a savings bond: visit a bank or submit a form to the US Department of the Treasury. Going through your bank may be the quickest option.
1. Redeem your savings account at a bank
If you are the owner or co-owner of a security, you can cash it at a bank. You must provide proof that you have the legal right to redeem the title if you are not listed as an owner. For example, you may want to discount your child’s bail when he or she is still a minor. You would need to write a statement on the back of the bond claiming that the child lives with you or that you have custody, and that the child is too young to apply on her own.
Profiting from a savings bond can be relatively easy if you take everything with you and know what to expect. For a smooth process, contact your bank in advance to discuss your options before you travel.
What do you need to bring when withdrawing a savings bond?
You will need to take the following to a bank when you are ready to withdraw a bond:
- The paper security(s) — you cannot redeem an electronic security at a bank. You will have to use the second option, which is to go through the US Department of the Treasury.
- Government ID – which could be your driver’s license or passport
- Death certificate of the original owner, if you are the legal beneficiary of the title owner who passed away
- Form 1522 — fill out in advance, but wait to sign until you get to the bank. If you do not have the form with you, the bank can provide you with a copy.
Can you withdraw a savings bond at any bank?
You can redeem a savings bond at a bank, but not all institutions cash in bonds.
“As a general rule, you will have better luck with larger national institutions,” says Abugideiri. “Larger institutions have more robust infrastructures and can handle various types of transactions.
will have their own limitations that are subject to these types of banking institutions.”
It is generally easier to redeem a security at a bank where you already have an account than at one where you do not have an account. For example, Bank of America requires you to have a Bank of America checking or savings account to withdraw a bond. If you’ve had the account for less than six months, you can only redeem up to $1,000 per day.
You can withdraw a bond at a bank where you don’t have an account, but that depends on the institution. It may be easier to open a bank account and redeem the bond.
Instead of going through a bank, you may prefer to withdraw a bond through the US Department of the Treasury. To do this, download and complete Form 1522 on the Treasury website. If you are redeeming more than $1,000, you will need to sign it in front of a notary or certifying officer. Then send the form to the following address:
Treasury retail bond services
PO Box 9150
Minneapolis, MN 55480-9150
2. Redeem your savings bond through the US Department of the Treasury
If you have an electronic bond or simply prefer not to go through a bank, you can withdraw a bond through the US Department of the Treasury. To do this, download and complete Form 1522 on the Treasury website. If you are redeeming more than $1,000, you will need to sign it in front of a notary or certifying officer. Then send the form to the address mentioned above.
Types of capitalization bonds
There are several types of premium bonds – with some, like Series E and HH bonds, now out of rotation over the years. There are now two remaining types you can buy: Series EE bonds and Series I bonds.]
EE series titles
If you purchased a Series EE bond in May 2005 or later, it earns a fixed interest rate issued when purchased. If you purchased before May 2005, the rate is variable. The government assigns Series EE bonds an interest rate every November and May. From November 2021 to April 2022, the rate is 0.10%.
EE Series titles double in value after you’ve held them for 20 years. For example, if you paid $100 for the bond, it is worth $200 after 20 years.
You can purchase Series EE bonds in cent increments from $25 to $10,000 per year.
Series I titles
Series I bonds earn a combination of a fixed interest rate and a variable rate that is intended to keep up with inflation. The latter is set every November and May. From November 2021 to April 2022, the combined rate for Series I bonds is 7.12%.
Each year, you can buy $25 to $10,000 of Series I electronic bonds or $50 to $5,000 of paper bonds.
Buy in cent increments starting at $25 for electronic bonds, or in denominations of $50, $100, $200, $500 or $1,000 for paper bonds.
Both Series EE and Series I bonds bear interest for 30 years when they mature.
“Before EE bonds, the government sold E bonds. And while they are no longer earning interest, they are still redeemable,” says Yusuf Abugideiri, senior financial planner at financial services firm Yeske Buie. Some banks will redeem Series E bonds, but you may need to go to the Treasury Department’s website.
When can you withdraw a savings bond?
You can withdraw Series EE and I titles as soon as 12 months after purchasing them. However, if you redeem them before the five-year mark, you will lose three months of interest.
Abugideiri recommends keeping an EE Series title for at least 20 years if possible, because the value doubles after 20 years. “So if you leave early, part of the ‘penalty’ is that you’re giving up returns that are guaranteed for the future,” he says.
Savings bonds stop accruing interest after 30 years. There’s no penalty if you redeem a bond after, say, 32 years instead of 30, “…aside from the implied penalty of lost returns,” says Abugideiri. “If there were two years where you could take those resources and invest in a higher-performing asset, you would have foregone those gains.”