Do Savings Bonds have to mature before I can cash them?

Thursday, July 29th, 2004
Categorized as: Cashing in US Savings Bonds

I have several Savings Bonds in my childrens’ names. I want to cash them in for college, but I am not sure when they mature. These bonds range in date from 1989 through 2003. If I am cashing these Savings Bonds in, do the minor children have to sign the back, or do I need to do something else in order for them to be cashed?

Tom’s response

You don’t have to wait until a bond matures before you can cash it. You can cash a Savings Bond one year after the issue date. However, if you cash it before five years, you lose the last three month’s interest. Our calculator will give you redemption values that have already been reduced by this penalty.

If one of your children’s names is on a bond as the registered owner and if that child is old enough to go to college, he or she can just take the bond to a financial institution that handles Savings Bonds (most banks, savings and loans, and credit unions handle them) and ask to have it redeemed. Your child will have to show identification and will have to sign the bond in front of one of the people at the bank.

It will pay you to take some time to figure out which of your Savings Bonds to cash first. You want to keep the ones paying the highest rates and you want to get as many as you can past the five-year date. My book, Savings Bond Advisor, has an exclusive Alert Recommendation for each savings bond issue date that can help with this decision.

You also need to be careful when you cash the Savings Bonds that were issued before 1997. They only pay interest every six months, so there’s a hidden interest penalty of up to six-months interest with these bonds.

Because the bonds are in your children’s names, they’re not eligible for the savings bond education deduction.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

18 Comments

On March 16th, 2007 steve said:

How do I find the value of a stock at he time of the bond owner’s death? If the bond was issued in 4/1986 and the owner died in October/95 as an example.

On March 20th, 2007 Tom Adams said:

Steve – the information you’re looking for is here: Cost basis for inherited Savings Bonds.

Tom Adams

On March 26th, 2007 Gerald Andrews said:

I have several bonds going back to 1958. I cannot find them nor the booklet that listed them. Is there anything I can do to replace them?

On March 26th, 2007 Tom Adams said:

Gerald – the information you’re looking for is here: How to recover lost Savings Bonds.

Savings Bonds issued in 1958 haven’t earned any interest for nearly a decade. You really need to get these bonds cashed and the money put back to work.

Tom Adams

On February 20th, 2009 Debbie said:

Can we still purchase I savings bonds?

On February 20th, 2009 Tom Adams said:

Debbie – Yes.

Tom Adams

On April 24th, 2009 Debora Clark said:

My children recieved saving bonds as gifts for thier birthdays and Christmas. One is still in college and the other has her degree. Should they cash the bonds in or hang on to them for a rainy day? Most are EE series.

On April 27th, 2009 Tom Adams said:

Deborah – the bonds earn interest for 30 years. There are typically a lot of family emotions connected to Savings Bond gifts that make the cashing decision difficult and there is no best choice for everyone.

Tom Adams

On August 17th, 2009 Joan Ermert said:

What is the mature rate for a savings EE bond? I’ve been purchasing bonds for my son’s education since he was born….he’s now ready to go to college and I was wondering which ones should be cashed first.

Is there a better option for saving for the rest of his education? Would cashing in the Series EE bonds I have and investing in another avenue be a better choice?

On August 18th, 2009 Tom Adams said:

Joan – There’s no short answer to the question of which ones to cash first. My book goes into detail on this.

I think at this point the EE bonds are your best investment choice – you’re expecting to spend it all in the next four years, right?

You are aware that you may be eligible for a tax deduction since you’re spending the money on a dependent’s college education? There’s more info on this here.

Tom Adams

On August 23rd, 2009 Susan Cesco said:

I’m trying to decide the best time to cash in my savings bonds (to avoid the six-month interest penalty).

On August 24th, 2009 Tom Adams said:

Susan – interest is paid in six-month cycles on the 1st day of the issue month and the first day of the month six months later.

So it’s best, for example, to cash a December bond issued before 1997 in December or June. For bonds issued after that it doesn’t matter.

There are a few other considerations besides this one in picking the best bonds to cash. If you have an investment larger than $10,000 it would pay you to spend a weekend reading my book.

Tom Adams

On April 8th, 2010 Karen said:

My father baught several savings bonds (EE)for my daughter. They show “to” her but my name shows a””POD” at the bottom. My daughter is not yet 18. Whose signature is required to cash them? How do I go about having them converted to my name so that they can be used towards her college education later tax deferred?

On April 9th, 2010 Tom Adams said:

Karen – If you name appears after the POD, that means you’re the beneficiary if your daughter dies, but gives you no rights to the bonds now.

So, your daughter’s signature is required to cash the bonds. However, if your daughter is a minor and you are a custodial parent, you can sign for her.

I would not recommend changing them to your name for the college education deduction. There’s more info here.

Tom Adams

On April 19th, 2010 lauren said:

If my grandmother who passed a few years back always gave my brother and i savings bonds for holidays and i just found some that said gift certifficate but none of them have receipts listed for them what do i do? If someone in my family cashed them with out me knowing is that leagal? and if they have not been cashed in how would i redeam the receipt?

On April 20th, 2010 Tom Adams said:

Lauren – A custodial parent can sign for a child, so it’s possible your parents cashed the bonds for you. But you should follow the procedure here to check.

Tom Adams

On May 4th, 2010 L ynne B said:

My son has some EE bonds that he wants me to cash in for him to help pay some school bills. His name is on it but at the bottom it says OR and my name, can I cash them for him or does he have to do it? He is 18.

On May 5th, 2010 Tom Adams said:

Lynne – Either of you can cash the bonds. The one who does will get the 1099-INT declaring the interest as income for tax purposes. So the one of you with the lowest tax rate should cash them.

Tom Adams

Comments Closed

June 1, 2010

After six years, over 400 posts, 3,680 real comments, and over 90,000 spam comments (thank you, Akismet, for making managing a blog with comments possible), I am closing public comments on Savings-Bond-Advisor.com. I will contine to update the main articles on this site, but not the comments.

Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for. If you have a copy of Savings Bond Advisor, you can ask me a question here.

Tom Adams

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