US savings bonds

[momz]

We have several US savings bonds that were gifted to my children for their "college savings". The oldest ones are about 9 years old. Obviously, they are not increasing in value much. So, we've been thinking about cashing them in and putting the money in our kids' Education Savings Accounts. But....(there's probably an obvious answer to this but...) how do you cash them in? Do you just go to your local bank? Are there fees or penaltys involved for cashing them? Does the bank take a cut, or does the child get the entire value of the bond? How do I know what the current value is?

Thanks for your help.

 

[akcire]

We have several US savings bonds that were gifted to my children for their "college savings". The oldest ones are about 9 years old. Obviously, they are not increasing in value much. So, we've been thinking about cashing them in and putting the money in our kids' Education Savings Accounts. But....(there's probably an obvious answer to this but...) how do you cash them in? Do you just go to your local bank? Are there fees or penaltys involved for cashing them? Does the bank take a cut, or does the child get the entire value of the bond? How do I know what the current value is?

Thanks for your help.

They are probably earning more interest than most bank accounts. You can take them directly to a participating bank for redemption. There are no fees unless they are brand new--I believe you must hold them 6 months or a year to prevent fees.

Keep in mind if you have EE bonds they were purchased for half the face value. So it is likely they are worth a little more than 1/2. If you have I-bonds they are worth the face value plus accumulated interest.

current value can be obtained from treasury direct . gov

http://www.treasurydirect.gov/BC/SBCPrice

 

[n2mm]

Keep in mind that you may have to claim the interest on your taxes. I believe that you don't if the bonds are cashed for education purposes, but since you're cashing them earlier, that may be an option that has to be dealt with. You might want to look into that so that you don't have any surprises when doing your taxes next year.

 

[PatsMom]

If the bonds are in the children's name taxes should not be owed on the accumulated interest unless the child has other income. If the bond is in the parents name and is otherwise eligible for the exclusion of interest for education, you might be able to exclude the interest income from your taxes.

Before cashing them in, check the interest rate. Some bonds are still earning good interest rates when compared to the other options available.

 

[A Mickeyfan]

I would hold on to them if I were you. Once they are at full value, they should be worth double of what you paid & with the way interest rates are, that is unheard of now.

 

[Sadie22]

Go to savings bonds.gov and see what the bonds are worth now and what they are earning. You may be surprised. We cashed some of ours in early and now wish we had held on to them longer.

 

[msmayor]

Our cache of savings bonds is earning an average of 3.5%...tax deferred. That's an amazing rate of return for such a safe investment nowadays.

I second the idea to check and see exactly what the return is. You could be surprised.

 

[jagafen]

Thanks for postign the link....it's saved to my bookmarks!!

 

[tink713]

Savings bonds are definetly earning more interest than most savings accounts out there. However you could cash them out and put them into CD's that are earning more interest.

If you are to cash them in all you need to do is go to the bank with your picture ID and they will cash them for you. The bank does not keep part of the cut. If you cash them in before they mature you will not get the face value of the bond, rather what you purchased them for plus interest.

 

[allie1078]

Are they series EE or I? If they are EE they are only worth half the face value until fully matured at 13years( I believe) They are earning interst and probably more than most savings accounts. I would also suggest going to the website to see exactly how much. If you do decide to cash them in some banks will cash them with proper ID. Call your bank to find out how they handle them.

 

[PatsMom]

Are they series EE or I? If they are EE they are only worth half the face value until fully matured at 13years( I believe) They are earning interst and probably more than most savings accounts. I would also suggest going to the website to see exactly how much. If you do decide to cash them in some banks will cash them with proper ID. Call your bank to find out how they handle them.

Not true about EE's. You are entitled to what you paid (50% of face value of the bond) plus accrued interest. There could be some penalty if you cash them in soon after purchase - I forget the rules on that.

One thing to keep in mind is that bonds accrue interest on the first of the month in the month they are due to increase (some are monthly, some are every six months). So if you have a bond that is credited interest only once every six months and you cash it in on the last day of the month before the accrual takes place, you really lose six months interest.

 

[buckler]

You can download the Savings Bond Wizard software from the Treasury Dept. website and keep track of your bond inventory. It will tell you how much interest the bond has earned and the current interest rate.
Savings Bond Wizard

 

[Peace Mickey Lovers]

thanks for all the info my girls have a lot of bonds going to keep them till they are a lot older!

 

[akcire]

I didn't post this earlier, but you can also open a treasury direct account and convert your paper bonds into electronic bonds. There is no charge to do this and then you do not have to worry about losing the paper bonds. Everything is available online and the current values can be seen.

 

[ceecee]

I still have bonds my aunt bought for me when I was little...40 years! Thet aren't earning interest and haven't been for a long while. We only have two banks near us that will cash them in (if you have an account with them, one I don't). Since my name changed, I had to have my marriage license with my maiden name on it. I cashed in ten (I still have over 30) and it took her 30 minutes!!! I did it at home in less time for all of them. My were series E and EE and some were Freedom Bonds. I plan to save them for DD's college, since I was fortunate enough not to need them for mine.

 

[Leleluvsdis]

I just cashed in all the savings bond's my parents have gotten me except for the one less than a year old, b/c you can't. They were maturing at a rate of 7/10th of a percent. The banks here have much better intrest rates than that. For them to have reached full maturaty it would have taken over 30 years. Our checking account is at 3.24% intrest.