Advertise with Us

Bookmark and Share

Debt Bug

Redeem Your Old Savings Bonds

Old savings bonds have a way of gathering dust or simply sitting forgotten in some old file box. Billions of dollars of unredeemed bonds should be cashed in for one big reason: they are no longer earning you any interest. Do you have some old savings bonds? Have they ceased to earn interest? Let's explore a potential gold mine that the U.S. Treasury Department currently says amounts to 13 billion dollars!

When your first child was born in 1965 all of her aunts and uncles ran out and purchased 25 dollar savings bonds for her. Although the total face value of the bonds was $275 your family only had to pay half that price to purchase a savings bond. Accumulating interest would mean that at some future point the full face value would be realized and the savings bond could then be redeemed.

For people who purchased a savings bond in 1965 and earlier, the U.S. government kept paying interest on those bonds for 40 years. This means that a $25 bond would not only fetch full price but an additional amount of interest would also be attached at redemption.

For people who purchased a savings bond in 1966 and subsequent years, the U.S. government stopped paying interest after 30 years. This means that your second child, born in 1969, had same amount of savings bonds given to her, but interest on those bonds ceased in 1999, a full six years before your first child's bonds stopped paying interest. Still, child number two would get the face value plus interest if the bonds were cashed today.

If you suspect that you may actually hold some savings bonds, then check your portfolio and closely inspect the issuance and redemption dates. It could be that they have long ceased paying out interest meaning inflation is now eating up their worth.

Redeeming savings bonds is easy: simply take your bonds to a local bank and present some photo identification. You'll owe federal tax on the income derived but you'll avoid state taxes as saving bonds are exempt from state taxation.

Clearly, U.S. savings bonds were once a powerful investment tool and they are a favorite with some investors even today. So, check your files and redeem matured savings bonds today. Yes, you'll have to pay federal taxes on them, but could it be that you will have a significant windfall nonetheless.