What Happens If You Cash I Bonds Early? Penalties and Rules Explained

Learn what happens if you cash I Bonds early, including interest penalties and the minimum holding period.

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If you cash I bonds before five years, you forfeit the last three months of interest. For example, if you cash them after 18 months, you'll only receive interest for the first 15 months. However, you must hold them for at least one year before they can be cashed.

FAQs & Answers

  1. Can I cash I Bonds before five years? You must hold I Bonds for at least one year before cashing them, but if you redeem them before five years, you forfeit the last three months of interest.
  2. What penalty applies if I cash I Bonds early? Cashing I Bonds before five years results in losing interest earned during the last three months prior to redemption.
  3. How long do I need to hold I Bonds before redeeming? You need to hold I Bonds for at least one year before you are allowed to redeem them.
  4. Will I Bonds pay full interest if held more than five years? Yes, if you hold I Bonds for five years or longer, you receive all accrued interest without any penalty.

Watch More

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