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What to do with a Savings Bond from Your Childhood

It is a common occurrence: Sorting through old letters, crowded filing cabinets, and the corners of desk drawers often yields surprises like old savings bonds. Sometimes parents and other relatives discover savings bonds they bought when you were a child but then forgot about.

Find out now: How should I save for retirement?

The good news is that savings bonds gain value over time through their interest rates. So forgetting about them may actually be a good thing. However, you may have to take a few steps to redeem the bonds and actually receive the cash.

Find Out What Type of Bond You Have

All savings bonds are essentially a contract with the U.S. federal government (despite their connection with government support, the Treasury Department does not make much money from bonds, but still uses them as an instructive tool). If you have a certificate-based bond from your younger years, it is probably either an EE or an I bond. The bond will clearly state which type it is in the title.

EE bonds have a 30-year term, which means they continue to earn interest for 30 years, much like a small, self-contained savings account. The bonds are bought for half their “face value” (anywhere from $50 to $10,000) and gradually mature. However, the interest rate continues for the full 30 years even after the face value is reached, which means that an old bond more than 20 years into its term is probably worth even more than stated. Rates change every six months, so guessing how much an EE bond can be cashed in for is tricky.

I Bonds are much like EE bonds, but have a hybrid rate scheme that is more complicated and are bought for their full face value instead of only half. They also last for 30 years, but include protection against growing inflation that may provide a boost in interest depending on economic history.

Visit the Treasury Calculator

When you have found out what type of bond you have, go to the Treasury Direct website to calculate the current value of your bond. This handy tool adds up all the interest for you with a few simple inputs. When you have calculated the value, it is time to make a decision: Do you want to cash in the bond now, or let it continue to mature? This will depend on the age of the bond, its current worth, and its future potential.

Locate the Correct Financial Institution

Banks and similar financial institutions must have the proper accreditation and technology in order to cash in a savings bond and put the cash in your hand (or transfer it to an account). Visit the websites of any banks you use to see if they can process bonds – or give them a call. A quick stop after work is enough to cash in a savings bond, but be prepared to present identification.

Photo Source: Flickr


Tyler Lacoma
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