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Are you interested in investing in I Bonds? These savings bonds are a great option for those looking to earn a guaranteed return on their money. In this article, we’ll cover everything you need to know about purchasing I Bonds, from how to open an account to how to purchase bonds through the TreasuryDirect website.
Opening an Account
- First, you’ll need to open a TreasuryDirect account. Visit the TreasuryDirect website and click on “Open an Account” at the top of the page.
- Follow the on-screen instructions to create a new account. You’ll need to provide personal information, such as your name, address, and social security number.
- You’ll also need to provide your bank account information if you plan to purchase I Bonds through the TreasuryDirect website.
Purchasing I Bonds through TreasuryDirect
Once you have opened a TreasuryDirect account, you can purchase I Bonds online. Here’s how:
- Log in to your TreasuryDirect account.
- Click on “BuyDirect” in the left-hand menu.
- Select “I Bond” from the drop-down menu.
- Enter the amount of the bond you wish to purchase.
- Select the recipient of the bond – either yourself or someone else.
- Choose the source of funds for the bond purchase.
- Confirm your purchase.
It’s important to note that there are limits on how many I Bonds you can purchase each year. As of 2021, the limit is $10,000 per Social Security Number.
Purchasing I Bonds with Your Tax Refund
If you’re expecting a tax refund, you can use it to purchase I Bonds. Here’s how:
- Fill out Form 8888 when you file your tax return.
- Enter the amount of your refund that you want to use to purchase I Bonds.
- Provide your TreasuryDirect account information on the form.
Keep in mind that the maximum amount you can purchase using your tax refund is $5,000.
Redeeming I Bonds
I Bonds can be redeemed after 12 months, but if you redeem them before 5 years have passed, you’ll forfeit the last 3 months of interest earned. To redeem I Bonds, follow these steps:
- Log in to your TreasuryDirect account.
- Click on “Holdings” in the left-hand menu.
- Select the I Bond you wish to redeem.
- Enter the amount you wish to redeem.
- Confirm your redemption request.
It’s important to note that if you redeem an I Bond before it has matured, you may be subject to penalties and fees.
Table of I Bonds Interest Rates
|Issue Date||Interest Rate|
|May 2021 – October 2021||1.68%|
|November 2020 – April 2021||0.00%|
|May 2020 – October 2020||1.06%|
|November 2019 – April 2020||0.00%|
It’s important to note that I Bond interest rates are adjusted twice a year – in May and November – based on changes in the Consumer Price Index (CPI).
Q: What is an I Bond?
An I Bond is a type of savings bond issued by the U.S. Department of the Treasury. It earns a fixed rate of interest, as well as an inflation rate that is adjusted every six months based on changes in the CPI.
Q: How much can I invest in I Bonds?
The maximum amount you can invest in I Bonds each year is $10,000 per Social Security Number.
Q: When can I redeem my I Bonds?
I Bonds can be redeemed after 12 months, but if you redeem them before 5 years have passed, you’ll forfeit the last 3 months of interest earned.
Q: What happens if I redeem my I Bonds before they mature?
If you redeem an I Bond before it has matured, you may be subject to penalties and fees.
Q: Are I Bonds a good investment?
I Bonds can be a good investment for those looking for a low-risk option that provides a guaranteed return. However, their interest rates are relatively low compared to other investment options.
Q: How often are I Bond interest rates adjusted?
I Bond interest rates are adjusted twice a year – in May and November – based on changes in the CPI.
Now that you know how to purchase I Bonds, you can make an informed decision about whether this investment option is right for you. Remember, I Bonds offer a guaranteed return and can be a good choice for those looking for a low-risk investment option. Thanks for reading, and we hope to see you back soon for more interesting articles!