How to Purchase I Bonds

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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

1. 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.
2. 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.
3. 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:

1. Log in to your TreasuryDirect account.
2. Click on “BuyDirect” in the left-hand menu.
3. Select “I Bond” from the drop-down menu.
4. Enter the amount of the bond you wish to purchase.
5. Select the recipient of the bond – either yourself or someone else.
6. Choose the source of funds for the bond purchase.
7. 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:

1. Fill out Form 8888 when you file your tax return.
2. Enter the amount of your refund that you want to use to purchase I Bonds.
3. 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:

1. Log in to your TreasuryDirect account.
2. Click on “Holdings” in the left-hand menu.
3. Select the I Bond you wish to redeem.
4. Enter the amount you wish to redeem.
5. 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).

FAQ

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.

Conclusion

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!

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