Savings bonds provide a convenient and low-risk method for investing in your future, saving for college or giving a monetary gift that will grow. You have the option to defer payment of taxes on interest until you cash them in or they mature, and interest on bonds used to pay educational expenses may be exempt under certain circumstances. While bonds can be easily cashed online or at at bank, you may or may not receive cash the same day.
The Treasury Department's Bureau of the Public Debt sells two types of savings bonds. Series EE savings bonds pay a fixed interest rate. Series I, "inflation protected," bonds pay a composite rate. One part of I bond interest is fixed, and the other is a variable rate tied to the Consumer Price Index. Until January 1, 2012, you can purchase both EE and I bonds in either electronic or paper form, and the method of cashing them will depend on which you chose. Paper bonds will no longer be sold after January 1, 2012, but you can continue to hold paper bonds you already own until they mature.
Once you purchase a savings bond, you must hold it for at least 12 months before cashing it in. If you redeem a savings bond less than five years after the purchase date, you will forfeit three months interest. Savings bonds are not transferable, nor are they sold on the secondary market. According toTreasuryDirect ,that if you find a savings bond or acquire one at an auction, you cannot cash it. You can cash in a bond that you co-own with someone else, even if that person is deceased.
Redemption of electronic bonds is simple, but you probably won't get the money the same day you redeem them. Log in to your account on the TreasuryDirect website and follow the instructions. They will credit the value of the bonds within one business day to the savings or checking account you provide.
Paper Savings Bonds
You must take paper bonds to a bank or other financial institution to redeem them. It's a good idea to call first to make sure the institution you select does redeem savings bonds. Unless you have an account with the bank, you will need a driver's license or other proof of identity. When cashing up to $1000 worth, you can usually receive the cash the same day. For sums exceeding $1,000, you must provide your Social Security number and sign the request for payment section on the back of the bonds in the presence of a bank officer. Then mail the savings bonds to your nearest Treasury Retail Securities Site. A list of Treasury Retail Securities Sites is available online at Treasury Direct.
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