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What to do with a savings bond from your childhood

United States Treasury savings bonds.
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As you’re rummaging through piles of stuff from your childhood, there are plenty of items you might be thinking about tossing in the trash: old toys, stacks of CDs and that art project from seventh grade. If you find some old savings bonds, though, make sure they’re in the “keep” pile. Long ago, someone – likely one of your parents or grandparents – did some investing for you by purchasing a savings bond issued by the U.S. government in your name. Surprise: You’re sitting on an unexpected chunk of money.

What type of savings bond do you have?

Before you decide what to do with your savings bond, you’ll need to know what type of bond is in your name. While the money you have in these bonds is exempt from state taxes, your interest earned is taxable by the federal government.

Series E: If you have a Series E bond, you’re sitting on something that actually no longer exists. The government stopped issuing Series E bonds in 1980. These were 30-year bonds. So if yours was issued in 1978, it matured in 2008.

Series EE: Series EE served as the replacement for the E bonds, and these earn different interest rates, depending on when it was issued. All EE bonds issued after May 2005 earn a fixed interest rate, while those issued prior to that date have variable interest rates.

Series I: Series I bonds are designed to protect against inflation with an annual interest rate that is set by a fixed rate and a semiannual inflation rate.

Are old savings bonds worth anything?

Figuring out how much your bond is worth is easy, thanks to the U.S. Department of the Treasury’s handy online calculator. Go to the TreasuryDirect website, and enter information about your bond – the type, the serial number and the date it was issued – to get a full rundown of its value, its year-to-date interest and its maturity date.

Can you cash in a savings bond at any bank?

To redeem your savings bond, the best place to start is the same place where you have a checking account. For example, at Bank of America, customers who have had a checking or savings account open for at least six months can easily cash in their savings bonds. The Treasury Department says that more than 95 percent of these bonds are redeemed at banks and credit unions.

If you do encounter the rare challenges when attempting to cash it in at your bank, you’ll need to do a bit of extra work to redeem it directly through the Treasury Department by downloading form 1522, getting your signature certified and mailing your unsigned bonds to:

Treasury Retail Securities Services
PO Box 214
Minneapolis, MN 55480-0214

Is now a good time to cash in savings bonds?

Before you cash in your savings bonds, be sure to weigh a few key considerations.

  • Make sure you won’t pay any penalty. Series EE and Series I bonds come with one caveat: If you cash the bond in before the five-year mark, you forfeit the previous three months of interest earnings.
  • Look at your interest rate. If your bond hasn’t reached maturity yet, you should consider how much you’re currently earning. This may vary widely, depending on the type of bond and when it was purchased. For example, a Series EE bond purchased in January of 2000 currently pays a 0.28 percent interest rate. A Series I bond purchased in the same month has much higher earning power with an interest rate of 5.11 percent.
  • Think about what you’re going to do with the money. If you need immediate cash to pay for unexpected expenses, that bond from your childhood can make a difference in your financial life. However, if you want to keep growing that sum of money, compare your current interest rate with other investment opportunities. You can easily find a better and equally low-risk way to use the money in that Series EE bond with a 0.28 percent interest rate. For example, you can withdraw that cash and compare savings rates at online banks like Marcus by Goldman Sachs and Ally Bank where you will get a better savings yield. Finding a replacement for that Series I bond, though, will be more challenging in today’s low-rate environment. You may be better off keeping the bond and reconsidering other options when savings rates increase.
Written by
David McMillin
Contributing writer
David McMillin is a contributing writer for Bankrate and covers topics like credit cards, mortgages, banking, taxes and travel. David's goal is to help readers figure out how to save more and stress less.