Savings Bond Rules

• When you buy savings bonds or have some that have been purchased for you as a gift, they cannot be redeemed within 12 months of the original purchase date. After that time, you may redeem the bonds for the purchase price plus any interest that has accumulated. If you redeem the bonds before five years have passed, you will miss out on some of the interest that accumulated. In this situation, a penalty of three months worth of interest will be applied.
  
  

Redeeming the Bonds

• When you redeem your bonds, the process is simple. You go to a local bank or financial institution and take the savings bonds with you. You will have to present some form of identification to redeem the bond. If you are a long-time account holder with the bank, you might not need to present identification to redeem the bonds. The bank will then give you the cash for the value of your bond.
  
  

Value

• Savings bonds earn a regular interest rate and have a maturity date. The maturity date is the date on which the bonds are scheduled to reach their face value. After the bonds reach their face value, they continue to earn interest for another 10 years. If you are redeeming the bonds early, you miss out on all of the interest that you could earn in the future. To determine the value of your savings bonds, you can use a savings bond calculator provided by the U.S. Treasury or take the bonds to your local bank.
  
  

Considerations

• If you live in an area that has been declared a federal disaster, you may get special treatment when it comes to cashing your savings bonds early. Although the normal rule is that you cannot cash the bonds within 12 months of purchasing them, people in federally declared disaster areas usually can cash them before the end of the holding period. If you live in one of these areas, cashing your bonds could help you come up with the money you need to help your financial situation.