In the current investment climate it's extremely difficult to find a security that offers safety, liquidity, or a decent yield, let alone some combination of these attributes.

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Redeeming I Bonds

I bonds are intended to be long term investments and have several limitations to encourage saving for longer periods of time. Series I bonds must be held for at least 1 year and can not be redeemed earlier. After they have passed 12 months, you can redeem an I bond to collect your original investment as well as any interest that has accumulated. If you decide to redeem a bond within 5 years of issuance, there is a penalty of the past 3 months of interest. After 5 years, a bond can be redeemed without penalty.

Partial Redemption of I Bonds

Instead of redeeming an entire I bond, it is possible to partially redeem the value of a bond. Paper I bonds can be redeemed in intervals of $25 and the remaining balance will be reissued in the remaining amount, but with the same issue date as the original bond. Electronic I bonds can be redeemed in part by using the TreasuryDirect site and going through the redemption process described below. There is a minimum redemption value of $25 and there must be at least $25 left for the remainder of the bond.

Redeeming Paper I Bonds

I bonds can be redeemed at most local banks that have a savings bonds program, which most do. Some banks may require you to be a customer with the bank to redeem them, but the process is not complicated. Some bank employees are unaware of I bonds, so it may be better to ask if the bank redeems savings bonds in general to avoid confusion. To redeem a bond, you must sign the back of the bond to authorize redemption and turn over the bonds to the bank.  You will need to verify your identity, so remember to bring along identification, such as a driver's license or passport.

If you are redeeming more than $1,000 for cash, some banks may not allow the entire amount to be processed in one day or otherwise limit your ability to redeem the bonds. If this happens, you can redeem the bonds by sending them to your closest Treasury Retail Securities Site. In this case, you must sign the request for payment on the back of the bonds before a certifying officer at the bank, provide your social security number, and then mail the bonds to your closest Treasury Retail Securities Site. You can find the closest location by using the TreasuryDirect locator available at You must mail the bonds as the physical location does not process redemption transactions.

Redeeming Electronic I Bonds

Electronic I bonds can be redeemed using the TreasuryDirect website, which is where the bonds were either purchased or converted from paper to electronic form. The redemption process takes you through several steps, from selecting the bond you wish to redeem to selecting the bank account you wish the redeemed funds to be transferred to.

Process for redeeming an I bond using TreasuryDirect. Click a thumbnail to view a larger version of the screen you will see.

Redeeming an I-bond 1. Log into TreasuryDirect and click on the Savings Bonds link. Once you log in, you will be presented with your homepage, including information on your current holdings, any new messages, and links to view details on your holdings. Since we are interested in I bonds, click on the "Savings Bonds" section listed under "Current Holdings."
Redeeming an I-bond 2. Locate the Savings Bonds group of products and select the Series I Savings Bond option. Click Select to continue. On the "Current Holdings" page, you will be provided with a list of all available products offered on TreasuryDirect with a summary of your values for each product. Under the "Savings Bonds" section, select the radio button next to "Series I Savings Bonds" and press the "Select" button.
Redeeming an I-bond 3. The list of I Bonds you own will appear. Select the specific bond you wish to redeem and click Select to continue. The Current Holdings Summary page will list all of the electronic I bonds you currently hold in your TreasuryDirect account. Locate the bond you wish to redeem and press the "Select" button to continue.
Redeeming an I-bond 4. Details about the bond will appear. The details page will include information about the I Bond you selected. To redeem the bond, click on the Redeem button. If a bond is less than a year old, the bond is not eligible for redemption and the button will not appear.
Redeeming an I-bond 5. Redeem your I bond. You can choose to redeem the entire bond or a partial amount. If you have multiple bank accounts linked to TreasuryDirect, you can choose which account to transfer the redemption value to. Click Submit to redeem your I bond.

Converting Paper Bonds to Electronic Bonds

Paper I bonds can be converted to electronic bonds with TreasuryDirect. Once you have a TreasuryDirect account, you can use the SmartExchange feature to convert your bonds. You can read more about the SmartExchange program on the TreasuryDirect site:

Page last modified 1/16/2012