When to Cash an EE Saving Bond

A paper EE Savings Bond is a security backed by the U.S. government that is used to finance government debt. U.S. Savings Bonds are purchased at half their face value then accrue interest, eventually becoming worth their face value. A savings bond can be cashed at many different times, though some are more prudent than others.

1-Year After Purchase

There is a 1-year waiting period before an EE Savings Bond can be cashed. After that 1 year period, the bond can be redeemed; however, it will not have reached its full face value and will be less a 3-month interest penalty for early redemption.

5 Years After Purchase

After 5 years have passed since the purchase date, a savings bond can be cashed without the 3-month interest penalty. However, the bond will not have reached face value. This renewal time period may be beneficial for someone in a dire emergency as they will not lose any interest already accrued by cashing in after the 5-year mark.

20 years after purchase

Though an EE bond may reach its face value prior to the 20-year mark depending on interest rates, the Federal Reserve guarantees that the EE Bonds will reach their face value by this time frame. A bond cashed after the 20-year mark will therefore be worth at least as much as the face value.

30 years after purchase

An EE bond will continue to earn interest through its 30th year. After this year has passed, there is no longer an interest benefit in holding on to the bond.

EE Electronic Bonds

EE Electronic Bonds are purchased directly online from the U.S. government and are purchased for their full face value. With these bonds, the 20-year mark discussed previously becomes irrelevant.

Considerations

Another factor that will determine the most advantageous time to cash in a bond will be an individual person's tax considerations. Before cashing in bonds, it is advisable to consult with a tax professional.