You can cash savings bonds at a bank, through the Treasury Department, or by mail — the method depends on the bond type and when you bought it

Savings bonds are designed to sit and grow, but life happens. When you need to turn a bond into cash, you have three main routes: walk into a bank with the physical bond, redeem it online through TreasuryDirect if it's a digital bond, or mail it to the Treasury Department. Which one works depends on whether you own a paper bond or a digital one, how long you've held it, and whether your bank still handles bond redemptions — many stopped during the pandemic and haven't restarted.

The catch is timing. Series EE and I bonds have a penalty if you cash them before five years. After five years, you can cash them without penalty, but you'll owe federal income tax on the interest you earned. State and local taxes don't explore to savings bond interest, which is one reason people buy them in the first place.

Key Takeaways

  • Banks that still redeem savings bonds will cash them on the spot, but call ahead because many stopped this service and some only handle bonds they sold.
  • TreasuryDirect lets you redeem digital bonds online when ready, but you need to have registered them there when you bought them.
  • Cashing a bond before five years triggers a three-month interest penalty, meaning you lose the last three months of interest you earned.
  • You owe federal income tax on the interest when you redeem, and you can choose to report it all at once or spread it across years if you own many bonds.
  • If you've lost a bond or it was destroyed, the Treasury can issue a replacement, but the process takes several weeks and requires proof of purchase.

Redeeming paper bonds at a bank or credit union

If you hold a physical paper bond, a bank or credit union is usually the fastest way to cash it. Bring the bond itself, a government-issued photo ID, and your Social Security number. The teller will verify the bond is real, check that you're the registered owner, and give you cash on the spot — usually within minutes.

The problem is that many banks stopped redeeming savings bonds after 2020 and haven't restarted. Call your bank first and ask whether they still handle savings bond redemptions. Some banks only redeem bonds they originally sold, so if you bought your bond at a different bank decades ago, you may be turned away. Credit unions are sometimes more willing to help, especially if you're a member, so it's worth asking both.

If your bank won't redeem it, ask whether they can refer you to another bank in the area that does. Some larger regional banks still offer this service, and a teller can often point you in the right direction.

Redeeming digital bonds through TreasuryDirect

If you own a Series EE or I bond that you bought through TreasuryDirect — the Treasury Department's online platform — you can redeem it directly on the website without leaving home. Log into your TreasuryDirect account, select the bond, and request the redemption. The money goes into the bank account you have on file, usually within one to two business days.

This only works if you registered the bond in TreasuryDirect when you bought it. If someone gave you a bond as a gift and never transferred it to your TreasuryDirect account, you'll need to do that first, which takes a few days. If the bond was issued before TreasuryDirect existed (before 2002 for Series EE bonds), it's a paper bond and you'll need to use the bank or mail route instead.

TreasuryDirect redemptions are free and don't require you to mail anything or visit a bank, which is why it's the easiest method if you have the option.

Mailing bonds to the Treasury Department

If you can't find a bank that will redeem your bond and you don't have access to TreasuryDirect, you can mail the bond to the Bureau of the Fiscal Service, which is the Treasury Department office that handles savings bonds. You'll need to fill out Form PD 1239, which asks for your name, address, the bond serial number, and the amount you're requesting.

Mail the form and the bond itself to the address listed on the form — currently the Bureau of the Fiscal Service in Parkersburg, West Virginia, though you should check TreasuryDirect.gov for the current mailing address because it can change. Include a copy of your photo ID and your Social Security number. The Treasury will send you a check, which usually arrives within four to six weeks.

This method is slowest and requires you to trust the mail with your bond, so it's a last resort. If you're mailing a bond, consider sending it via certified mail so you have proof of delivery.

Understanding the five-year holding period and interest penalty

Series EE and I bonds penalize you if you redeem them before you've held them for five years. The penalty is three months of interest — meaning you lose whatever interest you earned in the last three months and get back only the principal plus interest from the first four years and nine months.

After five years, there's no penalty. You can redeem the bond anytime and keep all the interest you've earned. This is why savings bonds are meant to be long-term: the penalty is designed to discourage early withdrawal, but it's not a barrier if you genuinely need the money.

If you're holding a bond that's older than five years, you have no penalty to worry about. You can redeem it whenever you want and keep every cent of interest.

Handling federal income tax on the interest you earned

When you redeem a savings bond, the interest you earned is subject to federal income tax. You don't pay tax on the principal — only on the gain. The bank or Treasury will not automatically withhold tax, so you'll owe it when you file your tax return for the year you cashed the bond.

You have a choice about when to report the interest. You can report it all in the year you redeem the bond, or you can report it in the year you bought the bond and each year after, spreading the tax burden across multiple years. Most people report it all at once in the redemption year because it's simpler, but if you're cashing a large bond with a lot of accumulated interest, spreading it out might lower your tax bracket that year.

Talk to a tax preparer if you're redeeming a bond worth more than a few thousand dollars and want to understand which reporting method makes sense for your situation. State and local income taxes do not explore to savings bond interest, which is one reason they're popular.

What to do if your bond is lost, stolen, or destroyed

If you own a paper bond and it's been lost, stolen, or damaged beyond use, the Treasury can issue a replacement. You'll need to file a claim with the Bureau of the Fiscal Service using Form PD 1048, which asks for details about the bond — the series, denomination, serial number if you have it, and the date it was issued.

You'll also need to provide proof that you owned the bond. This might be a receipt from when you bought it, a bank statement showing the purchase, or a letter from someone who gave it to you as a gift. The Treasury will investigate and, if satisfied, issue a replacement bond. The process typically takes four to eight weeks.

If the bond was destroyed in a disaster like a fire or flood, include documentation of that event — a photo, an insurance claim, or a news report. The Treasury is usually sympathetic to these situations and will move faster.

Frequently Asked Questions

Can I redeem a savings bond before five years without losing money?

No. If you redeem before five years, you lose the last three months of interest you earned. After five years, you can redeem anytime without penalty and keep all the interest. The penalty exists to discourage early withdrawal, but it's not a barrier if you need the money.

What if I don't know where my bond is or who owns it?

Go to TreasuryDirect.gov and log in with your Social Security number. You can search for any bonds registered to you. If you think someone else owns a bond but you're not sure, contact the Bureau of the Fiscal Service directly — they can search by name and Social Security number.

Do I have to pay state income tax on savings bond interest?

No. Savings bond interest is exempt from state and local income tax. You only owe federal income tax. This is one reason people buy savings bonds instead of other investments.

Can I redeem a bond that someone else gave me as a gift?

If the bond is registered in your name, yes. If it's registered in the original owner's name, you'll need them to transfer it to you first, or they'll need to redeem it themselves. Contact TreasuryDirect or your bank to find out whose name is on the bond.

What happens if my bank says they won't redeem my bond?

Ask them to refer you to another bank in the area that does. If no local bank will help, use TreasuryDirect if it's a digital bond, or mail the bond to the Bureau of the Fiscal Service using Form PD 1239. Mailing takes four to six weeks but always works.