Time to Cash in Your U.S. Savings Bonds?

U.S. savings bonds can be a great investment. They are safe, offer a fixed rate of interest, and are not subject to state or local income taxes. Whether you received U.S. Savings Bonds as a gift from your grandparents or bought them through a payroll deduction on your first job, you may own U.S. Savings Bonds that have stopped earning interest.

Key Takeaways

  • U.S. savings bonds, which come in different varieties, including Series E, Series EE, and Series I, stop earning interest at a certain point. 
  • The U.S. Department of Treasury estimates that there are billions of dollars in unclaimed savings bonds that have yet to be redeemed.
  • Interest on savings bonds is subject to federal income tax. 
  • U.S. savings bonds can be redeemed at many financial institutions. 

Series EE Bonds 

Series EE Bonds, the common variety first issued in 1980, and still being issued today, were designed to pay interest for up to 30 years.  So any bonds dated 1989 or earlier—the first generation, so to speak—will have stopped paying by the end of 2019. At that point, their value is frozen, so there is no reason other than nostalgia to hang onto them. Instead, you can cash them in and put the money to more productive uses.

Before the advent of Series EE Bonds, your grandparents might have bought you a Series E Savings Bond. Those were issued from 1941 to 1980, and all of them have stopped earning interest, too. 

Series I Bonds 

The more recent Series I Bonds—the kind that pays a combined fixed and inflation-adjusted rate—were first issued in 1998. They're good for 30 years, so the earliest of them will stop paying interest in 2028. 

How much unclaimed money is out there in the form of savings bonds that have stopped earning interest but have yet to be redeemed? The U.S. Treasury Department estimates that it’s billions of dollars.

The U.S. Department of Treasury issues these debt securities to help the U.S. government pay for their borrowing needs. 

What Are Your Bonds Worth?

To determine the value of your old bonds, you can use the Savings Bond Calculator on the TreasuryDirect website. You'll just need the type of bond, its denomination, and the date it was issued. There's also a place to type in your bond’s serial number, but you don’t need that in order to get a value.

The calculator's answer may pleasantly surprise you. For example, a $50 bond issued in August 1982, for which someone would have paid $25, is now worth $146.90. A $100 bond from February 1984 is good for $230.64. 

If you believe you own some old savings bonds but have lost track of them, you may be able to file a claim for the bonds with the Treasury by filling out Fiscal Service Form 1048, Claim for Lost, Stolen, or Destroyed United States Savings Bonds. Unfortunately, the popular online tool, Treasury Hunt, was discontinued in early 2017.

How to Cash In

You can redeem your old paper bonds at many banks and other financial institutions. The TreasuryDirect website doesn't maintain a list but suggests you call around. Bear in mind that savings bond interest is subject to federal income tax, but not state or local tax. 

You can either report it and pay tax every year that you hold the bond or wait until the end and pay the tax all at once, as most people do. After redeeming your bonds, you’ll receive an IRS Form 1099-INT, reflecting your taxable gain.

An exception, in certain cases, is if you use the proceeds from bonds issued in 1990 or later to pay for qualified higher-education expenses for yourself or your child. Those rules, which include income limits, are explained in the Education Planning section of the TreasuryDirect site.

The Bottom Line

Don't sit on cash that's coming to you. But before you cash in your bonds, it's a good idea to record what the Savings Bond Calculator says they're worth, just to be sure you get every dollar you're owed.

Article Sources

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  1. TreasuryDirect. "Timeline of U.S. Savings Bonds." Accessed March 14, 2020.

  2. TreasuryDirect. "Series EE Savings Bonds." Accessed Feb. 27, 2020.

  3. TreasuryDirect. "Cashing (Redeeming) EE and E Savings Bonds." Accessed March 14, 2020.

  4. TreasuryDirect. "Series I Savings Bonds." Accessed Feb. 28, 2020.

  5. TreasuryDirect. "Matured, Unredeemed Debt and Unclaimed Moneys Reports," Download "Statistical Report of Matured, Unredeemed Savings Bonds and Notes." Accessed Feb. 28, 2020.

  6. TreasuryDirect. "Calculate the Value of Your Paper Savings Bond(s)." Accessed Feb. 28, 2020.

  7. TreasuryDirect. "Filing a Claim for Lost, Stolen, or Destroyed United States Savings Bonds & Notes." Accessed Feb. 28, 2020.

  8. TreasuryDirect. "Series EE/E Savings Bonds Tax Considerations." Accessed Feb. 28, 2020.

  9. Internal Revenue Service. "About Form 1099-INT, Interest Income." Accessed March 14, 2020.