US Treasury I Bonds: A Guide to Buying from the Government

Buying US Treasury I Bonds from the government is a straightforward process that requires some basic information. You can buy I Bonds online or by phone through the Treasury Department's website.

To get started, you'll need to provide some personal and financial information. This includes your name, address, and social security number. You'll also need to decide how much you want to invest and how you want to receive your bond.

The minimum purchase amount for an I Bond is $25, and you can buy up to $10,000 in a calendar year. You can also use your tax refund to purchase an I Bond.

I bonds are U.S. savings bonds issued by the Treasury Department that are specifically designed to keep inflation from eating away at the buying power of your money.

They are designed to offer all Americans a way to save that protects the purchasing power of their investment while assuring them a real rate of return over and above inflation.

I bond experts often say a good way to think about them is like an inflation-protected savings account that’s backed by the full faith and credit of the United States.

The interest you earn on an I bond comes in two parts: one is a fixed interest rate, and the other is an inflation rate, which is adjusted every six months to keep up with inflation.

The interest rate on these bonds is currently set at 6.89%.

These bonds are non-marketable, which means they cannot be bought or sold on the secondary market.

The only place to buy them is on the TreasuryDirect.gov, a 20-year-old website run by the federal government’s Treasury department.

To buy an I bond, you'll need to create a TreasuryDirect account, which requires providing your social security number or tax ID, email address, and bank account number.

You can purchase digital I bonds online through the TreasuryDirect website, which is the main way to buy I bonds. This is the simplest method, and you can buy as little as $25 worth.

The Treasury Department also issues paper I bonds, but this method is largely phased out and only available through a byzantine process involving IRS form 8888 and tax refunds.

To log in to your TreasuryDirect account, you'll need to use your randomly generated account number, which acts as a username, and an "OTP" (one-time password) sent to your email.

You can buy digital I bonds fairly easily from your account dashboard, selecting the "BuyDirect" tab and choosing "Series I" under the "Savings Bonds" section.

The purchase limit for digital I bonds is $10,000 per year, and you can schedule repeat purchases weekly, biweekly, monthly, quarterly, or on any date of your choosing.

You'll receive an email confirmation when you submit your purchase, and your I bond value will display in the "Current Holding" section of your account shortly after.

You can gift up to $10,000 worth of I bonds per recipient, in addition to your personal $10,000 annual limit.

Paper I bonds are issued in multiples of $50, up to a limit of $5,000 per year, and can only be purchased through the IRS form 8888 process.

I Bond interest is a key aspect to consider when buying these US Treasury-backed investments. I bonds are relatively safe and inflation-proof investments, making them a great option for those looking to protect their money during inflation.

The interest rates for I bonds fluctuate significantly. Between 2020 and April 2021, the interest rate was around 2%, and by late 2022, it peaked at 6.89%.

In addition to a fixed interest rate, I bonds earn an inflation rate that's adjusted every six months based on the Consumer Price Index. This can make calculating the rate on a series I bond complicated.

Here are the key points to keep in mind about I Bond interest:

I Bonds offer a unique tax advantage: the interest earned is exempt from state and local income taxes.

You'll only have to pay taxes on the interest once you cash in the bond, which can be a big plus.

One major benefit of I Bonds is that they are relatively safe and inflation-proof investments, backed by the US Treasury.

The interest on I Bonds is also deferred from federal income tax until you redeem or reach the 30-year maturity.

If you use the interest to pay for higher education expenses, you may be entirely tax-exempt.

You can access your cash anytime you need, with no lock-in periods or penalties for early withdrawal.

To get started with buying I bonds from the US Treasury, you'll need to know the minimum and maximum purchase amounts. The minimum purchase amount is $25, and the maximum amount is $15,000 in a calendar year.

You can purchase up to $10,000 in electronic bonds from the TreasuryDirect site, and an additional $5,000 in paper I bonds with your tax return refund. I bonds are non-marketable, meaning you can't buy or sell them on the secondary market.

Be aware that there's a penalty for redeeming I bonds less than five years after purchase, and you can't redeem them less than a year after purchase at all.

I bonds have two separate interest rates that are announced every six months, on the first business days of May and November. The composite rate is made up of these two rates and is currently 5.27%.

The variable rate is based on the previous six months' worth of inflation data, and it can never drop below zero. This means that even in times of deflation, your variable rate will remain at zero.

The fixed rate is locked in for the entire lifespan of the I bond, which is 30 years or the date you sell it, whichever is sooner. Historically, the fixed rate has ranged from 0% to 3.6%.

The fixed rate is determined at the date of purchase, and if you buy an I bond now, you'll be able to lock in a 1.3% fixed rate. This rate will be calculated in addition to whatever the inflation rate is in future cycles.

You can buy I bonds between now and the end of April 2024 to take advantage of the 1.3% fixed rate.

The minimum purchase amount for I bonds is $25. You can buy I bonds online or through a tax refund, but you'll need to keep that in mind when planning your purchases.

The maximum amount you can buy in a calendar year is $15,000. This includes both electronic and paper I bonds.

To buy I bonds electronically, you can go to the TreasuryDirect site, and the maximum purchase amount is $10,000 per year. Paper I bonds purchased with your tax refund have a maximum of $5,000.

I bonds are non-marketable, which means you can't buy or sell them on the secondary market. This is something to consider if you're looking for a liquid investment.

You can't redeem I bonds less than a year after purchase, and there's a penalty if you redeem them within five years.

When buying I Bonds from the US Treasury, it's essential to consider your investment goals and risk tolerance. The interest rate on I Bonds is tied to the inflation rate, which can be a major consideration for investors.

I Bonds are designed to protect the purchasing power of your money, making them a great option for those looking to save for the long term. The inflation-indexed interest rate is calculated monthly and is based on the Consumer Price Index (CPI) for all urban consumers.

The minimum investment requirement for I Bonds is $25, and the maximum is $10,000 per calendar year. This means you can invest small amounts regularly, but be aware of the annual limit.

I Bonds are a low-risk investment, making them a great option for those who are risk-averse or want to diversify their portfolio. The US Treasury guarantees the principal and interest on I Bonds, making them a secure investment choice.

The interest earned on I Bonds is exempt from state and local income taxes, but you will still need to pay federal income taxes on the interest when you redeem the bond.