It may be time to turn those old U.S. Savings Bonds in your desk drawer into cash. Then again, it may not be. It’s smart to continue holding bonds that are earning a higher rate of return than other safe investments today.

Follow these six steps, courtesy of the U.S. Treasury, to make the right decision.

Related: How to Find Lost Savings Bonds, Bank Accounts and Other Assets

Get the facts on interest and maturity

Go to the Treasury’s online Savings Bond Calculator. Enter the series (such as EE, I or HH), serial number, denomination and issue date of your bond, all of which you can find on its face. The calculator will tell you how much you paid for the bond, how much interest it has earned, its current interest rate, when it will next earn interest, its redemption value and its final maturity date.

Know when to hold 'em or fold 'em

If a bond has matured and is no longer earning interest, the decision is a no-brainer. All E and H bonds are more than 30 years old and have matured, so you should redeem them. The same is true of some EE and I bonds.

HH bonds issued from 1980 through August 2004 earn interest for up to 20 years, so some may still be earning money.

To decide if you should redeem or keep a bond that hasn’t yet matured, check its current interest rate. The rates some older issues are paying may pleasantly surprise you. Series EE bonds issued before May 1995, for example, earn a guaranteed rate of at least 4 percent, which is more than two percentage points higher than what most bank certificates of deposit (CDs) pay today. If you don’t need cash immediately, you should continue to hold bonds whose rates remain competitive.

Related: 7 Costly Money Mistakes and How to Avoid Them

Redeem at the right time

You can cash in series E and I bonds after 12 months, but if you do so before a bond is five years old, you’ll lose the last three months of interest payments.

The holding period was only six months for H bonds, and all are more than five years old, so you can redeem any H bonds you hold without penalty.

Don’t redeem a bond just before it’s set to accrue interest. If you cash in a bond even one day before a scheduled interest posting, you can forfeit as much as six months of interest. To determine when a bond will next earn interest, check the column labeled “Next Accrual” on the Savings Bond Calculator.

Safeguard bonds you continue to hold

Don’t toss your bonds back into the desk drawer where you found them. Keep paper savings bonds in a bank safe-deposit box. Before you take them to your bank, photocopy them or record their serial numbers to store in your files at home.

Better yet, simplify your financial life by converting your paper series E and I bonds into electronic holdings. Start by opening a TreasuryDirect account on the Treasury’s website.

Choose how to cash in

It’s easy to redeem bonds you hold electronically. You can even direct the Treasury to deposit the proceeds into your bank account.

If you hold paper bonds, however, brace yourself for some potential hassles. Not all banks cash savings bonds, and some will do so only for customers. Call your bank in advance. If it will redeem your bonds, ask if it has a dollar limit on redemptions and what type of identification you should bring with you.

If you don’t want to cash in bonds at a bank, or if you hold H bonds, which banks don’t redeem, you can mail paper bonds to the Treasury Retail Securities Site (P.O. Box 214, Minneapolis, MN 55480-0214).

You’ll still have to trek to a bank, however, because a bank officer must certify your signature in the request for payment line on the back of each bond. Only then can you mail your bonds to the Treasury.

Give Uncle Sam his cut

The good news is that your earnings are exempt from state and local taxes. However, you will owe federal income tax on the difference between a bond’s issue price and redemption amount.

You may be able to avoid federal tax on your earnings, however, if you redeem EE or I bonds issued after 1989 and use the money to pay certain higher education expenses.

Related: Education Tax Breaks Parents of College Students Should Know About


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Denise Topolnicki is the author of How to Raise a Family on Less Than Two Incomes (Broadway Books).