Do Savings Bonds have to mature before I can cash them?

I have several Savings Bonds in my childrens' names. I want to cash them in for college, but I am not sure when they mature. These bonds range in date from 1989 through 2003. If I am cashing these Savings Bonds in, do the minor children have to sign the back, or do I need to do something else in order for them to be cashed?

Tom's response

You don't have to wait until a bond matures before you can cash it. You can cash a Savings Bond one year after the issue date. However, if you cash it before five years, you lose the last three month's interest. Our calculator will give you redemption values that have already been reduced by this penalty.

If one of your children's names is on a bond as the registered owner and if that child is old enough to go to college, he or she can just take the bond to a financial institution that handles Savings Bonds (most banks, savings and loans, and credit unions handle them) and ask to have it redeemed. Your child will have to show identification and will have to sign the bond in front of one of the people at the bank.

It will pay you to take some time to figure out which of your Savings Bonds to cash first. You want to keep the ones paying the highest rates and you want to get as many as you can past the five-year date. My book, Savings Bond Advisor, has an exclusive Alert Recommendation for each savings bond issue date that can help with this decision.

You also need to be careful when you cash the Savings Bonds that were issued before 1997. They only pay interest every six months, so there's a hidden interest penalty of up to six-months interest with these bonds.

Because the bonds are in your children's names, they're not eligible for the savings bond education deduction.