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 http://www.treasurydirect.gov/FC/FCGateway?site=indiv&app=sav.
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
Process for redeeming an I bond using TreasuryDirect. Click a thumbnail to view
a larger version of the screen you will see.
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."
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"
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.
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.
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
Page last modified 1/16/2012