Banking 101: How to Cash in Series EE Savings Bonds

Let us guess: A relative gave you a United States savings bond when you were a kid — now you’re wondering when, and how the heck, to cash it in.

Savings bonds are not terribly common anymore, so if you find yourself in this scenario, you may be unsure of what to do with yours. If you have a series EE savings bond and are trying to figure out how much they’re worth or how to redeem them, here’s what you need to know.

What is a Series EE savings bond?

So you have a Series EE savings bond. But what is it, really? In short, it’s a savings product issued by the U.S. government that pays interest for a maximum of 30 years. It gradually accrues interest over time, so the longer you wait to redeem it, the more it’s worth. After 30 years, it has “matured” and no longer earns any interest. According to Ashley Dixon, a Certified Financial Planner with Gen Y Planning, a Series EE savings bond is guaranteed to be worth its face (or dollar) value after 20 years and will earn additional interest for another 10 years.

Savings bonds are available in two forms: paper and electronic. However, there is no monetary difference between them, acknowledged Dixon.

“The difference lies in the transportability of the bond; a paper bond can be redeemed at most financial institutions, whereas the electronic bond is set up through the U.S. Government’s TreasuryDirect.gov website and redeemable through their channels,” Dixon said. “You can convert your paper bonds to electronic bonds on the TreasuryDirect.gov website for safekeeping until they reach their full maturity, and track their interest earned until maturity.”

On Jan. 1, 2012, financial institutions stopped selling paper bonds. Now you may only obtain Series EE bonds by purchasing them electronically at TreasuryDirect.gov. In the past, you purchased paper bonds at half of their face value — that is, you paid $50 for a $100 bond — whereas now electronic bonds are purchase at their face value.

When can I redeem my series EE savings bond?

If you need some spare cash, you might be wondering when you can redeem Series EE savings bonds. Regardless of whether it’s a paper or electronic bond, you can actually cash in savings bonds as soon as 12 months from the date they were issued. But remember, as Dixon warned, the sooner you redeem it, the less it will be worth, and you won’t be able to get its face value until 20 years after the issue date. Moreover, if you redeem a Series EE bond before you’ve held it for five years, you forfeit the last three months of interest. If you live in a federally declared disaster area, however, TreasuryDirect may waive the 12-month minimum and allow you to access the money sooner.

If you plan to redeem your bond prior to its full maturity, Dixon said, make sure to look at the issue date. If you could get one more year of interest by waiting a few weeks, it might be worth holding off, she advised.

Another thing to keep in mind before you redeem your bonds is the potential tax implication: “The interest earned on the bond is taxable income on your federal return in the year it is redeemed or the year it reaches full maturity,” Dixon stated. However, she noted, the interest isn’t taxable at the state or local levels. In addition, “it may even be exempt from federal taxable income if the income is being used for qualifying higher-education expenses at eligible institutions,” she added.

How do I redeem my series EE savings bond and can I take it all?

If you’ve thought carefully about any possible consequences and are ready to cash in a Series EE bond, it’s actually pretty easy. With paper EE bonds, most financial institutions will let you walk in and cash them, which the U.S. Treasury says is the quickest and easiest way to get the money. However, not all financial institutions cash Series EE bonds, and those that do may limit how much you can redeem in a single transaction. They also may require certain identification and documents, so check with your financial institution first. You also have the option of cashing paper bonds via snail mail, but of course this will take longer than redeeming them at a local bank or credit union.

If you want to cash in an electronic bond, you can do it easily online via TreasuryDirect.gov. Once you’ve redeemed it online, it can take as many as two business days for the funds to transfer to your checking or savings account.

Keep in mind that if you cash in a paper Series EE bond, you must redeem it in full; individual bonds cannot be split. If it’s an electronic bond, you can redeem just a portion of the bond’s value. However, you must redeem a minimum of $25 at a time, and you need to leave at least $25 in your TreasuryDirect account.

I have a Series I savings bond. Do I cash this in differently?

There is also another type of savings bond called Series I, which you may purchase with your Internal Revenue Service income tax refund. According to Dixon, both Series I and Series EE bonds are redeemable in the same way — “the main difference between Series I bonds and Series EE bonds is the rate at which they earn interest,” she explained.

Find out how much your series EE savings bond is worth

Before you decide to cash in your Series EE bonds, it’s smart to know how much they’re worth — and how much more they’ll be worth if you wait the full 30 years for them to mature.

If your bond is electronic, you can find out how much it is worth anytime in your TreasuryDirect.gov account, under the “Current Holdings” tab. If it’s a paper bond, you’ll use TreasuryDirect’s online Savings Bond Calculator to determine its value.

Once you enter the bond’s type, denomination, serial number and issue date, the calculator will tell you how much the bond is worth, along with information about interest accrual and its final maturity date.