Paper Chase

Marjorie Kondrack

I BEGAN BUYING Series I savings bonds in 1999. At the time, you could purchase them at a local bank and receive paper bonds. Amid 2022’s spike in inflation, those early bonds that I bought were—for a six-month stretch last year—yielding an annualized 13.08%. Not bad for a low-risk investment.

One drawback to buying savings bonds: the limit on how much a person can purchase each year. When I began buying Series I savings bonds, the maximum was $30,000 per person per year. The current annual limit on I bond purchases is now $10,000 per person, plus $5,000 more if you buy I bonds using a tax refund.

While paper savings bonds were once easy to buy, redeeming them is another story. Many banks have stopped cashing them, and the ones that still do have stringent requirements. You typically need to have an account at the bank and to have been a customer for more than a year. In my experience, most banks won’t cash more than $1,000 in bonds at any one time.

I recently visited my local bank to cash a few EE bonds that had reached their final maturity. The bank’s staff told me they no longer cashed savings bonds. Fortunately, I have an account at another major bank and was able to redeem them there.

When I went to that bank recently to cash a bond, I encountered a new teller. After a series of mistakes, she assured me that everything was okay. Then she handed me my deposit slip. It only showed the amount of a check I deposited—but not the proceeds from the bond. The bank manager then straightened everything out. Still, the whole experience was a little unsettling.

It’s likely simpler to redeem paper bonds by sending them to Treasury Retail Securities in Minneapolis, a service of the Federal Reserve. Along with the bonds, you have to fill out FS Form 1522. If the bonds are worth more than $1,000, the form will need to be signed in front of a notary or certifying officer.

I used this service when some HH bonds matured because banks aren’t permitted to cash them. In my case, a medallion stamp was required. The first bank branch I visited didn’t have this particular stamp, so I had to go to another branch 10 miles away. It took me the better part of the day to get the form stamped, and then mail the form with the bonds from my local post office.

In the not-too-distant future, the U.S. Treasury will handle all savings bond transactions through its TreasuryDirect website. Banks will no longer handle redemptions, just as they haven’t sold savings bonds for some time.

One improvement that the TreasuryDirect’s website has made: adding its savings bond calculator, which can give you the value of your paper bonds. It’s more convenient than the old method of figuring out the value of your bonds using redemption tables.

To those of you who plan to cash in paper bonds at a bank, it’s a good idea to call ahead and see if the branch still provides that service. And if it does, check your bonds’ value using the TreasuryDirect calculator beforehand—so the teller credits you with the right amount.

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