Key points
- Electronic I bonds can be cashed online through TreasuryDirect.gov.
- Paper I bonds can be cashed online, or they may be accepted by some banks.
- If you hold an I bond for less than five years, you’ll lose three months’ interest.
I bonds have been a popular investment option recently. Many people purchased them as inflation rose and I bond interest rates hit levels not seen in years.
Whether you bought I bonds or are considering doing so, you may be wondering how to sell them. The answer depends on whether you have electronic or paper I bonds. Either way, the government makes the process relatively simple.
But first, you must understand how I bonds work and how long you need to hold them. We’ll cover that and then get into the nitty-gritty of selling them.
What are I bonds? And how do I bonds work?
I bonds are a type of savings bond issued by the U.S. Department of the Treasury. They’re designed to earn interest based, in part, on the current rate of inflation. The composite interest rate for I bonds is set with a formula that uses two numbers:
- Fixed rate.
- Inflation rate.
The fixed rate of an I bond never changes. It applies for the life of the bond. The inflation rate adjusts every six months and is based on the consumer price index for urban consumers. The CPI-U takes into account price changes for all items, including food and energy.
Interest on I bonds accumulates monthly. It’s compounded semiannually. The bond’s interest rate is applied to the new principal value every six months. So the bond’s value increases not only with interest earned but with the compounding growth of the principal value.
What to know about selling I bonds
Your I bond will earn interest over 30 years. You can cash out your bond before then. But some stipulations apply. Here are some guidelines for redeeming your I bond:
- You can redeem the bond after holding it for a minimum of 12 months.
- If you cash in an I bond less than five years old, you’ll lose the last three months’ interest.
“Investors receive a lump-sum payment that includes all of your interest and principal,” said Akeiva Ellis, certified financial planner and founder of the financial website The Bemused. “You can also do a partial redemption of your electronic bonds, with a minimum of $25.”
If you cash only part of what the electronic bond is worth, you need to leave at least $25 in your account. If you have paper I bonds, you must redeem the entire bond. Partial redemptions of paper bonds aren’t allowed.
How to find an I bond’s value
The best way to manage your electronic I bonds is through TreasuryDirect. You can purchase and redeem savings bonds and check the value of electronic bonds anytime on this website.
Once you log in to your account, select Savings Bonds in the Current Holdings box. From there, choose the Series I Savings Bond option at the bottom of the page and click Submit. The following screen will show you the issue date of your bonds and their original value, current value and current interest rate.
You can calculate the value of paper I bonds with the TreasuryDirect paper savings bond calculator. You must enter bond information like the serial number, denomination and issue date.
How do I sell I bonds?
You can redeem your I bonds after 12 months. But there are rules for cashing them in.
“You can only buy and sell your I bond online through the TreasuryDirect website,” said Kevin Matthews, author and founder of BuildingBread, a finance website geared toward millennials.
To cash in your electronic I bonds:
- Go to your TreasuryDirect account.
- Go to ManageDirect.
- Use the link for cashing securities.
Paper bonds can be cashed at banks or through TreasuryDirect. But not all banks accept them. Plus, they might restrict how much you can cash at one time.
Redeeming paper I bonds at a bank
Selling paper I bonds can be more involved than cashing in electronic bonds. If you plan to redeem paper bonds in person, be prepared to provide proof of ownership or co-ownership.
Banks will not cash the paper bonds if:
- Any information on the bond has been altered.
- The bonds are defaced in any way.
- There are noticeable irregularities in the appearance of the bond.
- The bond is a photocopy.
- They’re suspicious of the person presenting them.
If you aren’t an owner, you must provide proof that you’re entitled to cash the bond.
Redeeming paper I bonds through TreasuryDirect
To sell paper I bonds through TreasuryDirect, use FS Form 1522. You can redeem your bonds in a few steps:
- Don’t sign the bonds.
- Fill out FS Form 1552.
- Get your signature certified if the value of the bonds you’re cashing is more than $1,000.
- Send the form and physical bonds to the address on FS Form 1552.
After processing, you’ll receive your funds. Remember that for paper bonds, you can’t cash a partial amount. You must redeem a paper bond for its entire value.
Will I get a form for filing taxes?
When you cash your bonds, you’ll get an IRS Form 1099-INT showing the total amount of interest they earned.
Electronic bonds are posted every January. So you can file your taxes well before April’s Tax Day deadline. You can find the form through the TreasuryDirect website on the ManageDirect page.
If you cash your paper I bonds at a bank, it may provide the 1099-INT form. When you get the form is up to the bank. It might provide the form right away. Or it might send the form to you at the end of the year. If you contact Treasury Retail Securities Services, you’ll get the form mailed.
How can I check if I have cashed an I bond already?
You can contact your local bank to see if your I bonds are eligible for redemption or have already been redeemed. Banks can’t always help. But they’re a good first stop.
If banks can’t help, reach out to Treasury Retail Securities Services. You must include the serial number of the bond with your written request. This is only good for owners or co-owners. If both people have died, you must send copies of their death certificates with your written request to:
Treasury Retail Securities Services
P.O. Box 9150
Minneapolis, MN 55480-9150
You’ll also need proof that you’re eligible to cash the I bonds. There are billions of dollars worth of unclaimed savings bonds that have stopped earning interest but haven’t been cashed.
Frequently asked questions (FAQs)
I bonds mature 30 years from the issue date. The maturity date is printed on the bond certificate and can be found in your TreasuryDirect account.
You must hold I bonds for at least one year before redeeming them. But if you cash them in less than five years, you lose the last three months of interest. There’s no maximum holding period for I bonds. And they’ll continue to earn interest until they reach maturity 30 years from their issue date.
It’s impossible to say exactly how much an I bond will earn because the interest rate on these investments is variable. Every six months, the government updates the interest rate to reflect inflation. You’re always guaranteed to receive whatever the fixed rate was at the time of your purchase. But the inflation rate and composite rate will change regularly throughout the life of the I bond.
