Where and how you cash in a bond depends on what kind you own

The method for cashing in a bond is different for Treasury bonds, savings bonds, corporate bonds, and municipal bonds — and where you go matters. Treasury bonds and savings bonds go through the U.S. Department of the Treasury or an authorized bank. Corporate and municipal bonds are sold through a brokerage account, usually the same place you bought them. The timing also varies: some bonds mature on a set date and pay you automatically, while others you must actively sell before maturity if you need the money sooner.

The key difference is between letting a bond mature (waiting until the end date and collecting the full face value) and selling it early (converting it to cash before maturity, which may mean accepting a price higher or lower than what you paid). Understanding which type you own and where it lives — in a Treasury Direct account, a brokerage, a bank, or a physical certificate — determines your next step.

Key Takeaways

  • Treasury bonds and savings bonds mature automatically and pay you through the Treasury Department or your bank, while corporate and municipal bonds must be sold through a brokerage if you want cash before maturity.
  • Savings bonds have a minimum holding period (usually one year) and a penalty for early redemption within five years, so the timing of when you cash in affects how much you receive.
  • If you own a physical bond certificate, you must take it to a bank or the Treasury to convert it to cash; digital bonds held in Treasury Direct or a brokerage can be redeemed online or by phone.
  • Selling a bond before maturity means its price depends on current interest rates — if rates have risen since you bought it, you may receive less than you paid.
  • You will owe federal income tax on the interest earned, and state tax may apply depending on the bond type and your state.

Cashing in Treasury bonds at maturity

When a Treasury bond reaches its maturity date, the U.S. Treasury automatically deposits the face value (the amount printed on the bond) plus any final interest payment into the account you designated when you bought it. You do not need to do anything — the money arrives on the maturity date. If you bought the bond through Treasury Direct (the government's online platform), the funds go to the bank account linked to your Treasury Direct account. If you bought it through a bank or broker, the payment goes to that institution.

Check your bond's maturity date by logging into Treasury Direct or reviewing your purchase confirmation. Treasury bonds typically mature in 20 or 30 years from the issue date. Once you receive the payment, the bond is fully redeemed and you own nothing further.

Redeeming savings bonds before maturity

Savings bonds (Series EE and Series I) have rules that make early redemption costly. You must hold a savings bond for at least one year before you can cash it in at all. If you redeem it within five years of purchase, you lose the last three months of interest as a penalty. After five years, you can redeem without penalty.

To redeem a savings bond, take the physical certificate to a bank or credit union, or use the Treasury's online redemption system if your bond is registered in Treasury Direct. The bank will verify the bond, check that you meet the holding period, and issue you a check or deposit the funds into your account. Processing usually takes a few business days. If you own an older savings bond that has stopped earning interest (most stop after 30 years), redeeming it immediately makes sense because you are no longer building value.

Selling corporate and municipal bonds before maturity

If you own a corporate or municipal bond and want cash before the maturity date, you must sell it on the secondary bond market through a brokerage. Log into your brokerage account, find the bond in your holdings, and place a sell order. The price you receive depends on current interest rates and the bond's credit quality — if interest rates have risen since you bought the bond, you will likely receive less than you paid. If rates have fallen, you may receive more.

The sale typically settles within two business days, and the proceeds land in your brokerage cash account. You can then transfer the money to your bank. The brokerage may charge a transaction fee, usually between $10 and $50 per bond, though some brokerages waive fees for certain bond sales. Ask your brokerage what the fee is before you sell.

Converting physical bond certificates to cash

If you hold a physical bond certificate — an actual paper document — you cannot cash it in online. Take the certificate to a bank or credit union that handles bond redemptions, or mail it to the Treasury Department with a redemption form. Many banks will not redeem bonds they did not sell, so call ahead to confirm they accept outside certificates.

If you mail the certificate to the Treasury, use Form PD 1048 (for savings bonds) or the appropriate form for Treasury bonds, available on the Treasury website. Include a copy of your ID and mail everything to the address listed on the form. Processing takes several weeks. For faster service, visit a bank in person with your ID and the certificate.

Understanding the tax impact when you cash in

When you redeem a bond, you owe federal income tax on the interest you earned, not on the face value itself. The amount of interest depends on the bond type and how long you held it. For savings bonds, the Treasury will send you a Form 1099-INT showing the interest earned, which you report on your tax return. For Treasury bonds and corporate bonds, your brokerage or bank will also issue a 1099-INT.

State income tax may apply to corporate and municipal bonds depending on where you live and where the bond was issued. Treasury bonds are exempt from state tax. If you are in a high tax bracket, the tax bill on a large bond redemption can be significant, so consider spreading redemptions across tax years if possible, or consult a tax professional before cashing in a large position.

What to do if you cannot find your bond or lost the certificate

If you own a savings bond but cannot locate the physical certificate, you can still redeem it through Treasury Direct if it was registered there. Log in, find the bond, and request redemption online. If the bond was not registered in Treasury Direct and you have lost the certificate, contact the Treasury's Savings Bond Division at 1-800-553-2663. They can search their records using your Social Security number and the approximate issue date. If found, they can issue a replacement certificate or process a redemption.

For Treasury bonds held in a brokerage or bank account, contact that institution directly. They have records of your holdings and can process a redemption without a physical certificate. For corporate or municipal bonds, your brokerage has the record and can sell the bond on your behalf.

Frequently Asked Questions

Can I cash in a bond before its maturity date?

Yes, but the terms depend on the bond type. Savings bonds require a one-year minimum hold and charge a three-month interest penalty if redeemed within five years. Treasury, corporate, and municipal bonds can be sold anytime through a brokerage, though the price may be higher or lower than what you paid.

What happens if I cash in a bond when interest rates have risen?

If you sell a bond when rates are higher than when you bought it, the bond's market price falls because new bonds offer better returns. You will receive less than the face value. This loss is permanent if you sell; if you hold to maturity, you receive the full face value regardless of rate changes.

Do I have to pay taxes when I cash in a bond?

Yes. You owe federal income tax on the interest earned. Treasury bonds are exempt from state tax, but corporate and municipal bonds may be subject to state tax depending on your location. The interest is reported on a Form 1099-INT sent by your bank or brokerage.

How long does it take to receive the money after I cash in a bond?

For Treasury Direct redemptions and bank redemptions of savings bonds, funds typically arrive within a few business days. Selling a bond through a brokerage takes two business days to settle. Mailing a physical certificate to the Treasury takes several weeks.

What if my bond has matured but I have not cashed it in yet?

Treasury bonds stop earning interest after maturity, so holding them longer gains you nothing. Savings bonds stop earning interest after 30 years. Contact your bank or the Treasury to redeem the bond and collect your money.