While the U.S. Treasury Department stopped issuing paper savings bond certificates four years ago and encouraged people to trade older ones in for an electronic version, many people still have paper bonds stashed away that they will end up cashing in sooner or later.
What many investors don’t consider when looking to cash in their savings bonds is finding out exactly how much each of them is worth.
That’s not the only mistake they make when it comes to redeeming U.S. savings bonds, according to financial columnist Jane Bryant Quinn of AARP Bulletin. And she said mistakes may be costing bond owners big bucks.
“When cashing in savings bonds, the longer you hold it, the more interest it accumulates until the holding period reaches the 30-year mark,” she said. “After that, no more interest accumulates and taxes are due whether you have redeemed the bonds or not. If you sell before five years are up, you pay a penalty equal to three months interest.”