savings bond question

sandy2006
sandy2006 Posts: 483 Member
edited October 2024 in Chit-Chat
My inlaws send my son these savings bonds for christmas and his b-day. I have never done anything with them and was thinking I want to cash one in so he can buy himself a birthday gift since he doesnt know why he gets a paper from grandma instead of a present. He's 4 yrs old tomorrow. So the question is where do I do this and is there a penalty for cashing them in?

Replies

  • dragonbait0126
    dragonbait0126 Posts: 568 Member
    You should be able to cash them at any financial institution. There's no penalty for cashing them in but do your research on them first. Determine what type of savings bond they are, how much interest they earn, and when the interest is paid. If the interest is paid every 6 months and it gets paid out in February but you cash it out tomorrow, you're going to lose any interest on it that may have accrued since the last interest payment. This is the website to the Treasury Direct and it has a bond calculator on it. There's also a "for kids" section (link is on the left side of the page) and will educate them about money and even has a "What are Bonds" activity. Might be a great teaching tool to show your son that the "piece of paper" grandmom and dad are give him is a rather awesome gift.

    http://www.treasurydirect.gov/indiv/tools/tools_savingsbondcalc.htm
  • sandy2006
    sandy2006 Posts: 483 Member
    I forgot to also mention that the bond is in My sons name only. Can I still cash it for him?
  • dragonbait0126
    dragonbait0126 Posts: 568 Member
    Yes but it is at the banks discretion. I can't see any of them having any issue with it though. I found this PDF which is a great resource on bonds as well.
    http://www.treasurydirect.gov/forms/sav0022.pdf
  • Dave198lbs
    Dave198lbs Posts: 8,810 Member
    they aint yours...hold them for him
  • sandy2006
    sandy2006 Posts: 483 Member
    Thanks so much!
  • ejohndrow
    ejohndrow Posts: 1,399 Member
    Like the person above said look into them and see what kind they are, but they aren't like checks, they are for the future, put them away and let them mature fully before cashing them out.
  • sandy2006
    sandy2006 Posts: 483 Member
    I hear everyone saying put them away and keep them. But Im not going to do this for his birthday this time. He receives 4 bonds a year from them at 100.00 a piece. I have kept them all for the last 4 yrs. (do the math) So every few yrs spending one that he just gets that hasnt earned anything is not going to kill the savings plan. but thanks for the advice.
  • xtinalovexo
    xtinalovexo Posts: 1,376 Member
    i work at a bank... savings bond = cheap gift.

    ee= HALF value... so let's say it's a 50 dollar EE bond... it is only worth 25 dollars and it takes 18 years to mature.

    i bonds are full face value, but cannot be cashed until a year after issuance, same as ee bonds.

    you can cash the bonds for him after certifying on the back that you are the parent of a minor... we have a message we write on the back and you have to sign. you do not have to have an acct to cash a bond because it is not a bank drawn check.
  • xtinalovexo
    xtinalovexo Posts: 1,376 Member
    I hear everyone saying put them away and keep them. But Im not going to do this for his birthday this time. He receives 4 bonds a year from them at 100.00 a piece. I have kept them all for the last 4 yrs. (do the math) So every few yrs spending one that he just gets that hasnt earned anything is not going to kill the savings plan. but thanks for the advice.

    if they are EE (which seems to be what all old people buy) thats only 800 dollars... which is better than nothing, but still not face value. if they are I bonds that's 1600 plus you would collect a small amount of interest already. A matured I bond usually earns alot of interest after maturing.
  • xtinalovexo
    xtinalovexo Posts: 1,376 Member
    I hear everyone saying put them away and keep them. But Im not going to do this for his birthday this time. He receives 4 bonds a year from them at 100.00 a piece. I have kept them all for the last 4 yrs. (do the math) So every few yrs spending one that he just gets that hasnt earned anything is not going to kill the savings plan. but thanks for the advice.

    if they are EE (which seems to be what all old people buy) thats only 800 dollars... which is better than nothing, but still not face value. if they are I bonds that's 1600 plus you would collect a small amount of interest already. A matured I bond usually earns alot of interest after maturing.
  • loved1
    loved1 Posts: 206 Member
    My inlaws send my son these savings bonds for christmas and his b-day. I have never done anything with them and was thinking I want to cash one in so he can buy himself a birthday gift since he doesnt know why he gets a paper from grandma instead of a present. He's 4 yrs old tomorrow. So the question is where do I do this and is there a penalty for cashing them in?

    It's a great opportunity to educate your son (& probably shift your own thinking). It's not just a piece of paper. It is a gift. It's probably one of the better presents that he gets since most toys & clothing for a child that age end up in a great pile of junk after a few months.
  • christine24t
    christine24t Posts: 6,063 Member
    If I were you, I would wait to cash one of them in until the time is up to show your son how they work and how to use money responsibly.
  • sandy2006
    sandy2006 Posts: 483 Member
    Thankyou christinalove for the helpful info.

    As for teaching my son a lesson about money, it is highly unlikely he will understand what I am saying at 4 years old. My son has autism and right now his maturity is that of maybe a 2 year old. So we are going to take this one bond cash it in and let him pick out something he wants for his birthday.
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