Series I Bonds Paying 3.36% Good Option for Savers

Series I Bonds are currently paying 3.36% and are state and local tax free (and federal tax deferred). They can't be sold for 1 year so can be compared to a 1-year CD.

Treasury Series I Bonds are currently paying 3.36% and are state and local tax free (and federal tax deferred). They can't be sold for 1 year so can be compared to a 1-year CD. The best 1-year CD rate is currently 2%.

Series I Bond have several advantages over CDs:

  • They are state and local tax free and Federal tax deferred.
  • They are designed to hedge against future inflation. Read a full description of how Series I Bonds work.
  • They are Federal tax free is used for college tuitin within 12 months of being redeemed.

With many analysts predicting a rise in inflation over the next five years, there is a good probability that the rate the bond pays will go up.

The disadvantates of Series I Bonds over CDs are:

  • You can only invest $10,000 per year per person. $5,000 of paper bonds and $5,000 in electronic format.
  • You will be penalized the most recent 3 months of interest if you withdraw the money after 1 year but before 5 years. The 3 months of interest penalty is quite low compared to many CDs, which generally penalize 6 months of interest.

Safety of Series I Bonds

Like regular Treasury notes, bills, and bonds, Series I bonds are backed by the full faith and credit of the US government. They carry a AAA rating and are amongst the safest investments in the world.

Purchasing Series I Bonds

Series I Bonds can be purchased electronically from Treasury Direct. Paper I Bonds can be purchased at many local banks. Call your bank to see if they offer them.

Buying I Bonds through TreasuryDirect:

  • Sold at face value; you pay $50 for a $50 bond.
  • Purchased in amounts of $25 or more, to the penny.
  • $5,000 maximum purchase in one calendar year.
  • Issued electronically to your designated account.

Buying Paper I Bonds:

  • Sold at face value; i.e., you pay $50 for a $50 bond.
  • Purchased in denominations of $50, $75, $100, $200, $500, $1,000, and $5,000.
  • $5,000 maximum purchase in one calendar year.
  • Issued as paper bond certificates.

Learn more about Series I Savings Bonds

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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