Therefore, if you need cash flow to cover emergency expenses and do not have an emergency fund, go ahead and cash in your savings bond before even considering touching your k. The return on investment with a k s compounding interest is exponentially higher than what you can earn from a savings bond. And in times of financial crisis, experts agree cashing in your bond is better than dipping into your k early or taking on debt.
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Getty Images. Editorial Independence We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money. Pro Tip Avoid cashing in your savings bond early, unless you need cash now or plan to invest the money in an account that earns higher interest. Savings Bonds Series. How Do Savings Bonds Work? In all cases, make sure your decision to cash out the savings bonds is part of a larger plan, is in line with your risk tolerance and investment time horizon, and is contributing to your overall financial goals.
If your savings bond was purchased electronically, such as one of the Series EE or Series I bonds, you can redeem your bonds online via your TreasuryDirect account and get the money deposited to your checking or savings account within a few business days. If you have a paper savings bond, you can often redeem this bond at a local bank or credit union. So, when in doubt, start by going to the bank. Interest income from U. Your interest income from a U. Talk with a professional tax advisor to decide which reporting method makes sense for your overall tax situation.
Before redeeming a savings bond, make sure you understand the details of your particular savings bond and are ready to deal with possible interest penalties or tax implications.
And be ready to talk with a professional financial advisor for how you can put your savings bond money to better use to support your long-term financial goals. Ben Gran is a freelance writer who covers personal finance and financial services. A graduate of Rice University, he has written for several Fortune financial services companies.
Ben is based in Des Moines, Iowa. Select Region. United States. United Kingdom. Ben Gran. Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations.
Types of U. Savings Bonds There are several types of U. Series HH Series HH Savings Bonds were issued from to , and had a maturity date of 20 years, so some of these bonds are still earning interest until Figuring Out What Your Savings Bonds Are Worth The value of a savings bond depends on a few factors: what type of savings bond it is, when it was issued and whether it was sold at face value or as a percentage of face value.
There are a few questions you should think about before you decide to redeem your savings bonds: Has the bond fully matured? If your bond is no longer paying interest and has fully matured, then you may as well cash it in and get that money to put toward other purposes. Has the bond reached its full face value? Some bonds were sold at half of face value, and can only be redeemed for full face value after a certain amount of time has passed.
Make sure you are eligible to receive the full amount of cash that you were expecting to get. Will you have to pay an interest penalty? Why are you cashing out the bond—what do you want to do with this money? Savings bonds are meant to hold your savings and deliver a stable interest rate over several years. Why are you cashing out this bond now? Can you earn a higher yield on your savings by investing in the stock market or putting cash into a high-yield savings account?
Do you need short-term emergency cash or money for a major purchase? The following resources provide detailed operational guidelines for paying agents of U. Savings Bonds, including:. The Guide to Cashing Savings Bonds FS P outlines your responsibilities and liability as a qualified agent for redeeming savings bonds. The guide includes the three basic types of identification you can request from customers redeeming savings bonds, as well as examples of acceptable identification.
The Circular stamp helps you provide fast service to customers who redeem large quantities of savings bonds. Instead of the customer signing each savings bond, your institution stamps the back of each bond with the Circular stamp.
Circular stamps are available only to qualified paying agents. The first stamp is available at no charge. If you are interested, please contact the Minneapolis Treasury Retail Securities site.
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