Comments on: The Savings Bond Dilemma: Cash Them In Now Or Wait?

By: dave

dave — Fri, 05 Dec 2008 05:01:37 +0000

carl, i have same problem friend gave me several series e bonds for my childrens college fund and has since passed away, am having major problems cashing them, i have been told i need to hire an attorney to petition his estate. if anyone knows a better way please help.

By: carl turner

carl turner — Fri, 03 Oct 2008 22:40:35 +0000

i found 4 us savings bonds with a face value of $2700 dollars issue dtae was may 1979 the new value is around $12,000 but i dont know how to cash them and i aint ken to the woman who they belong to how would i go about cashing them is there like a seven year wait period or something

By: conny

conny — Tue, 12 Aug 2008 09:00:20 +0000

Maureen you have a bond that has given you less the 2 % a year and paying someone else 6.99. I am sure IRS will take less then 100% of your earning in taxes, so use the rest of the money to pay down your debt.

By: Maureen

Maureen — Fri, 29 Feb 2008 20:17:43 +0000

I have a $10K savings bond from 1984. I believe it is worth about $15K now. I would like to cash it in to pay for our new van. Am tired of paying over $100 per month in interest (6.99%). Is this a good idea? I am concerned about having to claim all the interest this bond has accrued on my taxes for 2007.

By: Karen

Karen — Tue, 12 Feb 2008 18:37:22 +0000

What if a bank refuses to cash in savings bonds–I belong to a credit union and unfortunately they moved 70 miles from where i live so I am not driving there…I went to a bank and they said ok–then what was my acct number. They almost became hostile when I said I was not a customer. The head of their customer service came over and said they would do it just this once but never to come in again and ask- WOW and it was only for 300 dollars. I would have NEVER purchased these bonds if I knew I could never get to them in an emergency–any suggestions?

By: conny

conny — Fri, 24 Aug 2007 10:14:45 +0000

my take on this is strictly economical.
If the bond has a value lower then face value then this is interest to maturity. So the interest will be very close to a investment made now to a bond wit the same date of maturity. example if a new 10 year to maturity bond giving x in interest then a older giving only y but with the same ten year to maturity will have a interest of x to but the price of the bond will be lower to compensate to a interest of x.

Most notable on this will be a zero interest bond.
the time to maturity will give you the price. a ten year or a twenty year bond with the same maturity date will have the same price 5 year to maturity as a new 5 year bond at that time.what you gave for the bond in the past has no bearing here.

So cash it for a new investment is probably not a god idea. Cash it for a lone payment with a interest higher then a new bond is sound.

sorry for my bad language skills, this isn’t my first language.

By: st

st — Thu, 23 Aug 2007 01:41:13 +0000

–
Cashing them in now would let me make 5.05% if I put it in an HSBC Direct account, or 7% if I used it to repay a 7% debt. That’s far better than in bond form.
–

Isn’t it true that the 5% is a pre-tax return, and the 7% is an after-tax return? Essentially making the difference greater than suggested in the original post?

By: st

st — Thu, 23 Aug 2007 01:39:20 +0000

>>Cashing them in now would let me make 5.05% if I put it in an HSBC Direct account, or 7% if I used it to repay a 7% debt. That’s far better than in bond form.

By: Cheap Like Me

Cheap Like Me — Wed, 22 Aug 2007 16:57:23 +0000

If bonds have matured, they are not accruing interest. You should cash them and invest the money at a better rate or pay off debts.

If they have not matured, and you have had the bonds less than five years, you give up three months of interest if you cash them. If you have had the bonds longer than five years, there’s no interest penalty.

You can cash bonds at your bank. If you don’t have a bank account (credit union, etc.), call the Federal Reserve for information. They actually have incredible customer service. You send the bonds to them with a signature guarantee (have a bank or credit union manager “guarantee” your signature with their medallion stamp) and a letter telling them where to send the check.

By: Kris

Kris — Wed, 22 Aug 2007 15:56:37 +0000

I’m in a similar situation, with about $700 of matured bonds sitting in a dresser drawer, most from my first communion. I know these would make more money in a high-yield savings account, but it’s difficult giving them up. So many are from long-gone relatives, I’d like to do something really meaningful with them.

What that is, I don’t know, but I have to agree with Trent – there are definitely psychological factors that may not be present with other money issues.

By: Ted

Ted — Wed, 22 Aug 2007 13:52:53 +0000

plonkee the difference is you’re getting a positve return on your borrowing. Trent (and others) are borrowing at 6-7-8% (and some up to 20% on credit cards) to get 3% back.

By: Michelle

Michelle — Wed, 22 Aug 2007 13:43:20 +0000

Thanks for writing about this. I actually have 5-10 bonds my grandparents bought me over the years, they’ve been sitting, forgotten, in a filing box. My family is in financial difficulties NOW. I think I’ll check on their values….anyone have advice on how to cash them in? Just take them to a bank?

By: Rita

Rita — Wed, 22 Aug 2007 13:04:00 +0000

So, what are you going to do?

By: Gayle

Gayle — Wed, 22 Aug 2007 12:17:52 +0000

A little different sort of emergency fund is perfect for using savings bonds. For women who are in the dire straits of an abusive relationship it is an ideal portable savings account. They can be bought in relatively small increments and there are no interest statements arriving at the house or reportable on tax returns until they are cashed. That is they are easy to hide, but in your own name.

As for what you should do Trent, use it for Christmas gifts.

By: plonkee

plonkee — Wed, 22 Aug 2007 11:25:39 +0000

Just thinking about the ‘would you borrow x amount to invest in…?’ argument. I actually did just borrow more than £80K to invest in real estate. I also borrowed in excess of £9K and put it into a high interest savings account. The thing that significantly decreased the risk of these actions is that I can pay back the loans solely out of my income regardless of whether or not my investments do well. Does no one else do these things?

By: KiranG

KiranG — Wed, 22 Aug 2007 03:14:17 +0000

There was a competition in high school that I competed, in economics actually, and my team went to nationals and my winnings were 2500 in EE savings bonds (only worth 1250). I figured it would be some great mad money for the future, but I eventually forgot about them. Come my senior year at college I found them, and figured they would be great for paying for a Vegas trip after graduation.

In the end I just did the boring thing and it simply became the first 1495 dollars of an emergency account.

By: jtimberman

jtimberman — Wed, 22 Aug 2007 02:24:55 +0000

Someone called into the Dave Ramsey show recently with exactly this question. Sort of.

Some relative had given their children savings bonds for college. Total value was about $1000 at the time. The caller asked Dave what to do. After going over their financial picture, and discovering they had some credit card and other loans of their own, he recommended that they cash them in immediately and use that to start paying off debt. When the caller gets through Dave’s baby steps, they’d be able to cover the amount of these bonds easily without all the payments they had currently.

Additionally, Dave asks a lot of callers a question similar to this: “If you didn’t have any debt, would you go borrow $X to invest in (bonds|mutual funds|real estate|single stocks)?” The answer is usually no, if the person is paying attention. Sometimes people will try to argue about higher interest rate on the investment than on the debt, and that always gets beaten down :-).

So Trent, cash in the bonds and write a principal payment check for the next lowest debt in your debt snowball :-).

By: Jen

Jen — Tue, 21 Aug 2007 23:10:44 +0000

OK, so you’re thinking of cashing in bonds that have not matured yet. That’s the part I missed.

I say keep ‘em. We’re only talking about $240 here. It’s not a large enough sum to worry about and not enough money to do anything super cool with. Think of them as an ultra-emergency fund and put them in the file cabinet.

By: js

js — Tue, 21 Aug 2007 22:52:26 +0000

They do stop earning interest eventually. Usually after 30 years but you really should do further research. The government makes a decent amount of money off people who still hold EE bonds that don’t pay interest any more. Don’t let them rip you off! (although really they are fairly open about this fact).

By: Engineer

Engineer — Tue, 21 Aug 2007 22:42:43 +0000

I actually have part of my emergency fund in U.S Savings Bonds, a good part of which is in I-bonds I bought back in 2000 when the fixed part of the interest rate was over 3%. After inflation is added in, I’ve at times made 7% on them.

For me one consideration is the tax-deferment on savings bonds, plus no state income taxes either. The tax on the interest is paid when cashed in, and my theory is that if I’m in a true emergency situation I’ll likely be in a lower tax bracket.