BPS JPT FOR YOU: How to Cash Savings Bonds in an Emergency

Saturday, April 16, 2011

How to Cash Savings Bonds in an Emergency

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How to Cash Savings Bonds in an Emergency: "

You can purchase United States Government savings bonds for half the price of their face value. Although you can cash your savings bonds at any time to receive the interest earned to date, you must hold the bonds to maturity for them to be worth their full value or more.
Savings bonds seem safe because they will never go down in face value, but you can lose money on savings bonds, as the dollar loses value through inflation. Nonetheless, they are commonly viewed as long-term savings or rainy day money in the event of an emergency, in part because they are easy to cash in.

Steps

Check the value of your bonds. You can do this using the calculator at the U.S. Treasury's website, TreasuryDirect.gov. Use the following method to check:
- Have your bonds handy when you go to the website.
- Select the series and denomination of your savings bond from the designated drop-down menus.
- Enter the issue date of the bond in the appropriate field and click 'Calculate.'
- The following page will show you the current value of the bond. Change the date field to see what that same bond would be worth if you cashed it in at a later date.
Cash in savings bonds that have already matured before any others.
- Matured bonds have reached their maximum value and are no longer earning interest. The amount of time it takes for a bond to reach maturity is based on the bonds' series, but most bonds have a base maturity period of 20 years.
- Series EE bonds, from the 1980s and 1990s, have an extended maturity of 10 years beyond the 20-year base. These savings bonds accrue interest for a total of 30 years, and so have the potential to be worth more than their face value.
Compare the particulars of the rest of your savings bonds if you don't have enough money in matured bonds and you need to sell bonds that haven't matured.
- Start with the oldest bond first; in most cases the earliest savings bond will be closest to maturity, unless your bonds are from multiple series.
- Check the interest rates each bond is earning–the rate of the interest was determined at the time you purchased the bond. The easiest way to find out the rate is to use the calculator on the U.S. Treasury's website.
Determine how many bonds you must sell to cover your emergency expenditures. Consider selling a little bit more than you think you need to cover unforeseen costs.
Call your bank or credit union and ask if they cash savings bonds. In most cases, they offer the service only for account holders.
Mail the savings bonds to the federal government if you can't find a banking institution to cash them locally.
- The U.S. Treasury's website has details and instructions on mailing the saving bonds to the government for redemption. There are several Treasury Retail Securities offices, and the one you should contact depends on where you live.
- Obtain a PD F 5179-1 form from the Treasury. Fill out the form and have your signature certified by a notary public. Most banks provide notary services for members. If not, check your local directory for notary republics in your area.
- Mail the form, along with the bonds you wish to sell, to the government via certified mail so you have tracking services and proof of delivery.
- The Treasury Department will send you a check for the value of the bonds you sold.
Sell your bonds online at the Treasury's website if they qualify. You are allowed to convert some bonds paper to electronic form and sell them online, without having to mail in the physical copies. Check the website to see if your bonds meet the requirements.

Tips

The Treasury Department calculates interest on bonds every six months. If possible, time the sale of the bond to just after one of these periods. Selling the bond prematurely could cost you up to six months of lost interest.

Warnings

You'll owe federal tax on the interest you earned from the savings bonds the year you sell them. If possible, avoid selling too many bonds in the same year if doing so pushes you into a higher tax bracket.