TreasuryDirect Customer Service Delays and Estate Planning Concerns

Posted on November 17, 2024 // 11 Comments
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TreasuryDirect.gov is the official site for individuals to directly purchase US savings bonds and US Treasury bonds, including new T-Bills and TIPS at auction. But is it still worth the hassle? Back in August 2024, TreasuryDirect sent me the following e-mail when converting my paper bonds to electronic:

Cases are worked in the order they are received in our office. Your request is important to us and will receive attention as soon as possible. Please be aware of our estimated processing times to process your case which are based on the case type:

Cases requesting to cash Series EE and/or Series I paper savings bonds held in your name, at least 4 weeks.
Cases requesting to cash Series HH savings bonds held in your name, at least 3 months.
Unlocking your TreasuryDirect account, updating bank information in that account, or converting your paper savings bonds into electronic bonds in TreasuryDirect, at least 4 weeks.
Claims for missing, lost, or stolen bonds, at least 6 months.
All other cases, at least 20 weeks.
If we require additional information to process your case, we will contact you. Thank you for your patience.

That’s at least a month for some pretty basic stuff like unlocking your account because you forgot what you said was your favorite movie. In October 2024, the WSJ published TreasuryDirect to Bond Buyers: Moving Your Money Could Take a Year regarding long delays transferring Treasury bonds to outside brokerages.

The resulting customer service backlog is straining the Treasury Department’s antiquated system, which can require verified signatures and paper forms sent through the mail. People transferring securities from TreasuryDirect to third-party brokerages face especially long waits because those requests are processed manually, according to people familiar with the matter.

TreasuryDirect tries to complete most of them within six weeks, but can take 12 months, depending on capacity. A notice on the TreasuryDirect website says some customer service requests “may require 12 months or more to process.” The notice had said the longest delays were about six months until the end of July.

Finally, there are multiple posts on the Bogleheads, Early Retirement, and Reddit forums about the difficulties of dealing with TreasuryDirect after the account owner passes away. Here’s one example from a user that was already familiar with the website, knew all the account information, and had the beneficiaries assigned correctly, but still encountered multiple forms, conflicting instructions, and months of delays – Treasury Direct – The Eternal Wait and No Way To Track Transfer:

I’m closing in on 3 months waiting for Treasury Direct to transfer several EE bonds and an I bond that were in my dad’s online Treasury Direct account to my online Treasury Direct account. My dad passed away at the end of December 2022 and I was registered as the beneficiary with POD on all of the bonds.

And the follow-up (emphasis mine):

My dad’s I bonds were transferred to me around the 4-5 month mark.

After that experience, I decided to liquidate all of my TD accounts, and will encourage my husband to do the same. I personally don’t want a repeat of this experience, or make my heirs go through such a lengthy process in resolving my estate.

What I learned from this experience is to not discount how much stress and mental bandwidth it takes to deal with TD when you’re also grieving the loss of a family member, and trying to settle the estate so you can move on financially.

Another similar estate horror story here.

Takeaway #1: Expect and prepare for slow service. It’s very clear that TreasuryDirect is an underfunded government program with very limited resources. Even most mega banks no longer cash in old paper savings bonds, so that has increased their workload as well. Any time there is a surge in demand, either due to relatively attractive rates on savings bonds or Treasury bills, they are going to get backed up. If you happen to lock yourself out of your account during one of these times, it may take months to fix it! Be very careful before you close that old bank account linked through TreasuryDirect. Use a reliable password manager, and be sure to add your answers to questions like “Who is your favorite child?”. Be sure to note your account information in multiple documents, in case someone needs to find it.

Takeaway #2: Never use TreasuryDirect for anything besides US savings bonds. TreasuryDirect.gov is the only place where you can purchase US savings bonds, but it is not the only place you can buy individual Treasury bonds and TIPS. Just open an account with a broker with better resources and a bond desk like Fidelity, Schwab, or Vanguard and go through them.

Takeaway #3: Consider your heirs and simplifying your accounts as you age. In my opinion, I would also avoid TreasuryDirect if you are older and you don’t want to burden your estate executors with dealing with TreasuryDirect. You can save them several months and many hours of calls and paperwork by liquidating your assets and consolidating them elsewhere. TreasuryDirect will likely take the longest to resolve out of all of your financial accounts.

Personally, I continue to gradually liquidate the savings bonds in my TreasuryDirect account and buying individual TIPS in an outside brokerage account instead. I will have to pay some taxes on the deferred interest, but since I am getting a 1% to 2% higher fixed rate via TIPS in many cases, it’s not that bad. I also worry that my survivors might completely overlook this account if something unexpected happens (there are no mailed paper statements, or even monthly e-mails of online statements.) I’d like to minimize any unnecessary headaches and consider this part of my overall portfolio simplification process.

If I was younger and still grinding for every small edge, I would probably still accept these shortcomings for the right interest rate and tax deferral properties, but nowadays the calculations are different.

Image source: Sitejabber

Filed Under: Banking, Estate Planning, Investing, Savings Bonds, Treasury Bills and Bonds //
Last updated: November 17, 2024
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Savings I Bonds November 2024: 1.20% Fixed Rate, 1.91% Inflation Rate (3.11% Total for First 6 Months)

Posted on October 31, 2024 // 1 Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Update: Savings I Bonds bought from November 1, 2024 through April 30, 2025 will have a fixed rate of 1.20%, for a total rate of 3.11% for the first 6 months. As a quick and dirty comparison, the nominal yield on 5-year Treasury bonds is currently 4.15% and the real yield on 5-year TIPS is currently 1.77%.

Every existing I Bond will earn this inflation rate of ~1.91% eventually for 6 months; you will need to add your own fixed rate that was set based the initial purchase month. See you again in mid-April for the next early prediction for May 2025.

Original post:

Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. With a holding period from 12 months to 30 years, you could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the November 2024 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what an October 2024 savings bond purchase will yield over the next 12 months, instead of just 6 months. You can then compare this against a November 2024 purchase.

New inflation rate prediction. March 2024 CPI-U was 312.332. September 2024 CPI-U was 315.301, for a semi-annual inflation rate of 0.95%. Using the official composite rate formula:

Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

This results in the variable component of interest rate for the next 6 month cycle being ~1.90% to 1.91%, depending on the fixed rate.

Tips on purchase and redemption. You can’t redeem until after 12 months of ownership, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A simple “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month – same as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month. (You should always sell at the very beginning of the month.)

Buying in October 2024. If you buy before the end of October, the fixed rate portion of I-Bonds will be 1.30%. You will be guaranteed a total interest rate of 1.30 + 2.98 = 4.28% for the next 6 months. For the 6 months after that, the total rate will be 1.30 + 1.91 = 3.21%.

Buying in November 2024. If you buy in November 2024, you will get ~1.91% plus a newly-set fixed rate for the first 6 months. The new fixed rate is officially unknown, but is loosely linked to the real yield of short-term TIPS with some reductions. My rough guess is somewhere between 0.9% and 1.2%. The current real yield on short-term TIPS is lower than it was during the last reset, when the fixed rate was set at 1.3%. Every six months after your purchase, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your specific purchase month. Everyone will eventually get this variable rate. Your bond rate = your specific fixed rate (based on purchase month, look it up here) + variable rate (total bond rate has a minimum floor of 0%).

Buy now or wait? Between those two options, I would buy in October as you’ll likely get a higher fixed rate and a decent initial 6-month rate. However, I actually don’t plan to buy any savings bonds this year. The yields are simply not very interesting as compared to other options. Short-term, it’s better to go T-Bills with the state tax exemption. For my inflation-protected needs, I have been buying longer-term TIPS instead to lock in the higher current 2%+ real yields (in tax-deferred).

Unique features and considerations. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and potential tax benefits if used toward qualified educational expenses.

The main drawback is hassle. You can only buy new savings bonds through TreasuryDirect.gov, which is limited in its customer service resources and features. Conducting certain transactions may require a medallion signature guarantee which requires a visit to a physical bank or credit union and snail mail. If your password is compromised, they will not replace any lost or stolen savings bonds. The juice may not be worth the squeeze when you can own individual Treasury bonds or TIPS within any full-service brokerage account. (Finding a bank that will redeem a physical paper savings bond at all can be difficult these days.)

Over the years, I have accumulated I-Bonds and consider it part of the inflation-linked bond allocation inside my long-term investment portfolio. However, after converting all my paper bonds to electronic versions earlier this year, I have been selling the lower fixed rate bonds and reinvesting in 2%+ real yield TIPS.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. As of 2024. you can only buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. (No more tax refund savings bonds.) Technically, the purchase limits are per Social Security Number or Employer Identification Number. For those looking for another way to expand their purchasing power, that means you can also buy for a child, grandchild, LLC, or a trust.

Bottom line. Savings I bonds are a unique, low-risk investment that are linked to inflation and only available to individual investors. You can now only purchase them online at TreasuryDirect.gov. For more background, see the rest of my posts on savings bonds.

[Image: 1942 US Savings Bond poster – source]

Filed Under: Banking, Investing, Retirement, Savings Bonds //
Last updated: October 31, 2024
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Paper US Savings Bonds with Federal Tax Returns Eliminated

Posted on September 8, 2024 // 2 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Goodbye, physical US savings bonds! Per this TreasuryDirect announcement, the US Treasury will no longer allow to you to buy an additional $5,000 in paper Series I savings bonds each year with your tax refund, effective January 1st, 2025. (If you haven’t filed your 2023 Tax Year returns, you can still get them with your late filing by October 15, 2024 using IRS Form 8888.)

Honestly, I’m very surprised it lasted this long. You haven’t been able to buy paper bonds anywhere else for over a decade. Finding a bank to even cash in an existing paper bond is like a treasure hunt. (It’s easier to just convert them to electronic first, then sell them online.) My theory is that there was some warehouse full of blank paper bonds that they wanted to use up. Here are some stats on who actually used this option:

– On average, 35,000 tax filers each year bought paper Series I bonds: this represented .03 percent of tax filers, and less than 10 percent of Series I bond purchasers.
– Less than 10 percent of participants consistently participated (more than 2 years).
– Sales of paper I bonds through this program made up less than 1 percent of all series I savings bond purchases.

(I might be too lazy to update all of my old Savings Bonds update posts…)

Purchase limits otherwise remain the same: $10,000 in electronic I Bonds and $10,000 in electronic EE bonds per year per Social Security Number or Employer Identification Number. For those looking for another way to expand their purchasing power, that means you can also buy for a child, grandchild, LLC, or a trust.

Filed Under: Savings Bonds //
Last updated: September 8, 2024
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Savings Bonds: Converting Paper to Electronic at TreasuryDirect (My Experience)

Posted on August 20, 2024 // 6 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

After dealing with the estate of a family member, I saw firsthand the benefits of simplifying my financial situation. (They need a better term than “death cleaning“.) If not for me as I get older, definitely for my wife and/or kids in the future. This conflicts with my constant desire to try out new stuff and chase rates, but I’m working on it. Paper savings bonds are definitely something that could easily be lost or forgotten.

Even if they are found, there are vanishingly few banks that will redeem paper bonds anymore. Another option is to physically mail them in with FS Form 1522 and cash them out directly, but that requires a signature guarantee or notary. All more potential work for others.

My ultimate goal is to liquidate all of my savings bonds at TreasuryDirect and replace them with cash or TIPS (thus removing an account to track) in an existing brokerage account, but ideally in a manner sensitive to both the current interest rates being paid and my marginal income tax rate. It is also possible that I may use them for higher education expenses, which would be within the next 6 years.

Therefore, the best option seems to be to convert these paper bonds into electronic format at TreasuryDirect.gov, combining them with my existing electronic savings bonds, and then liquidating them as needed. The conversion process does not require a signature guarantee nor notary. Electronic bonds also provide the option of partial redemptions. The main risk is the hassle of lost paper bonds if something goes wrong in transit.

General conversion directions. Here are the conversion instructions directly from TreasuryDirect:

  1. Go to your TreasuryDirect account.
  2. Select ManageDirect.
  3. In the Manage My Linked Accounts menu, select Establish a Conversion Linked Account. If this option doesn’t appear, you have a Conversion Linked Account already. Skip to step 6 below.
  4. Review the information about conversion linked accounts.
  5. Select Create Account.
  6. In the Manage My Conversions menu, select How to Convert My Paper Bonds.
  7. Follow the instructions there.
  8. When you prepare your paper bonds to submit for conversion, do NOT sign the back of the bonds.

Basically, you have to enter the information on each of your paper savings bonds and they will create a numbered manifest with all of the bond data. You must send in your original paper savings bonds along with this signed manifest. Here is what you must certify with your signature:

By signing below:
1. I certify that I am requesting conversion of the listed savings bonds. I further certify that any bond not registered in my name was purchased by me as a gift to the bond’s registered owner.
2. I acknowledge and accept the terms and conditions set out in the regulations for TreasuryDirect at 31 CFR Part 363.
3. I understand that converted bonds are automatically redeemed upon final maturity and the interest reported to the IRS. I also understand that a Zero-Percent Certificate of Indebtedness (C of I) is
purchased with the redemption proceeds of the bonds.
4. I certify that all information provided is true, correct, and complete.

They state that you will not receive any notifications on the process, but you can check the status online:

You will not receive a notification when we receive the bonds or when the conversion process is complete. However, you may check the status of your bonds at any time, through your TreasuryDirect Conversion linked account. Click ManageDirect, then “View my manifests.” Select the manifest you wish to view and click the Select button. You will see one of the following notations in the Status column next to the bonds on your manifest:

In Progress – processing in progress;
Pending – Customer Service needs additional information;
Returned – Bond returned to you as ineligible for conversion;
Not received – Treasury did not receive the bond listed on the manifest;
Canceled – Bond closed in previous transaction. For example, a replacement bond was issued after being reported lost, stolen, or destroyed; or
Converted – Bond converted. Check your Current Holdings or Gift Box in My Converted Bonds Linked Account, or your Minor Linked Account.

My paper bond conversion timeline. I mailed them both in on July 17th, 2024 using USPS Priority and the default tracking number. . As they were titled in two different names, I sent them in two separate envelopes with two separate manifests. The tracking number confirmed basic delivery.

Roughly two weeks later on July 30th, 2024, I received the following e-mail confirmation, only for one of us (my wife). Apparently there are notifications after all? However, I never received any e-mail confirmation for myself for my own customer number. It’s possible that I overlooked it, but I did search my Junk and Spam folders. Here is the text of the e-mail.

Customer Number: XXXXXXX
Customer Name: Mrs. MMB
Case Number: 1-XXXXXXX

Dear Customer,

This is a system generated email to communicate we received your Savings Bonds/Treasury Marketable Securities materials.

Cases are worked in the order they are received in our office. Your request is important to us and will receive attention as soon as possible. Please be aware of our estimated processing times to process your case which are based on the case type:

Cases requesting to cash Series EE and/or Series I paper savings bonds held in your name, at least 4 weeks.
Cases requesting to cash Series HH savings bonds held in your name, at least 3 months.
Unlocking your TreasuryDirect account, updating bank information in that account, or converting your paper savings bonds into electronic bonds in TreasuryDirect, at least 4 weeks.
Claims for missing, lost, or stolen bonds, at least 6 months.
All other cases, at least 20 weeks.
If we require additional information to process your case, we will contact you. Thank you for your patience.

Please retain the Customer Number and Case Number referenced above to streamline any future actions associated with this request. Also note, you may receive multiple email notifications and Case Numbers depending on the type of transaction(s) you have requested.

If you have additional questions, please use the Contact Us link on TreasuryDirect.gov.

We appreciate your interest in U.S. Treasury securities.

Sincerely,
Treasury Services

Initially, I was a little concerned about my missing confirmation e-mail, but I figured there was nothing I could do until it was either processed or enough time had passed that I could claim it as lost. I told myself that there is a clear process to claim lost or stolen paper savings bonds using FS Form 1048, in case it came to that. I had made copies of everything in order to maintain a record of the serial numbers.

On August 14th, 2024 (two weeks later), I decided to log into my TreasuryDirect account to check on things. Given they stated “at least 4 weeks” above, I was surprised to find that all of the paper bonds (both my and my wife’s) showed in our respective “My Converted Bonds” account. You can also check the status of existing manifests under “ManageDirect” and then “Manifest Information” (screenshot at top of post).

So there you have it. As of later 2024, it took roughly two weeks to get receipt confirmation (maybe) and another two weeks (maybe) to process. Everything worked out in the end, and hopefully this information will help set some reasonable expectations for others.

p.s. I was able to add a new linked bank account using routing and account numbers with no additional security steps. Not even microdeposits. I don’t know if this is a good move overall, but I am personally glad to not have to hunt down a local bank branch that will grant me a medallion signature guarantee like they were requiring several years ago.

Filed Under: Investing, Retirement, Savings Bonds //
Last updated: August 19, 2024
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Savings I Bonds May 2024: 1.30% Fixed Rate, 2.98% Inflation Rate (4.28% Total for First 6 Months)

Posted on April 30, 2024 // 11 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Update: Savings I Bonds bought from May 1, 2024 through October 31, 2024 will have a fixed rate of 1.30%, for a total composite rate of 4.28% for the first 6 months. The semi-annual inflation rate was 1.48% as predicted (2.96% annually), but the full composite rate is dependent on the fixed rate for each specific savings bond and so it is a little bit higher. This total composite rate is a bit lower than current short-term Treasury yields, and the fixed rate is about 1% lower than that of current short-term TIPS yields.

Every existing I Bond will earn this inflation rate of ~2.96% eventually for 6 months; you will need to add your own fixed rate that was set based the initial purchase month. See you again in mid-October for the next early prediction for November 2024.

Original post from 4/14/24:

Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. With a holding period from 12 months to 30 years, you could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the May 2024 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what a April 2024 savings bond purchase will yield over the next 12 months, instead of just 6 months. You can then compare this against a May 2024 purchase.

New inflation rate prediction. September 2023 CPI-U was 307.789. March 2024 CPI-U was 312.332, for a semi-annual inflation rate of 1.48%. Using the official composite rate formula:

Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

This results in the variable component of interest rate for the next 6 month cycle being ~2.96% to 2.97% if you use a fixed rate of between 0% and 1%.

Tips on purchase and redemption. You can’t redeem until after 12 months of ownership, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A simple “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month – same as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month.

Buying in April 2024. If you buy before the end of April, the fixed rate portion of I-Bonds will be 1.30%. You will be guaranteed a total interest rate of 1.30 + 3.97 = 5.27% for the next 6 months. For the 6 months after that, the total rate will be 1.30 + 2.97 = 4.27%.

Let’s look at the scenario where you hold for the minimum of one year and pay the 3-month interest penalty. If you theoretically buy on April 30th, 2024 and sell on April 1st, 2025, I estimate that you’ll earn a ~4.04% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. If you theoretically buy on April 30th, 2024 and sell on July 1, 2025, you’ll earn a ~4.09% annualized return for an 14-month holding period.

Comparing with the best interest rates of October 2023, these rates are lower than what is available via regular nominal Treasury bonds and other deposit accounts.

Buying in May 2024. If you buy in May 2024, you will get ~2.97% plus a newly-set fixed rate for the first 6 months. The new fixed rate is officially unknown, but is loosely linked to the real yield of short-term TIPS. My rough guess is somewhere between 1% and 1.5%. The current real yield on short-term TIPS is a tiny bit lower than it was during the last reset, when the fixed rate was set at 1.3%. Every six months after your purchase, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your specific purchase month. Everyone will eventually get this variable rate. Your bond rate = your specific fixed rate (based on purchase month, look it up here) + variable rate (total bond rate has a minimum floor of 0%).

Buy now or wait? Between those two options, I would buy in April as you’ll likely get a the same or tiny bit higher fixed rate and a decent initial 6-month rate. However, I actually don’t plan to buy any savings bonds right now and will be waiting until the next CPI announcement in mid-October, as I have been buying longer-term TIPS instead (in tax-deferred) to lock in the current 2%+ real yields.

Unique features. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and potential tax benefits if used toward qualified educational expenses.

Over the years, I have accumulated a nice pile of I-Bonds and consider it part of the inflation-linked bond allocation inside my long-term investment portfolio.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. You can only buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888. If you have children, you may be able to buy additional savings bonds by using a minor’s Social Security Number. TheFinanceBuff has a useful post on gifting options if you are a couple and want to frontload your purchases now. TreasuryDirect also allows trust accounts to purchase savings bonds.

Concerns about TreasuryDirect customer service. Opening a TreasuryDirect account or conducting other transactions can sometimes be a hassle as they may ask for a medallion signature guarantee which requires a visit to a physical bank or credit union and snail mail. This doesn’t apply to everyone and seems to have gotten better recently, but plan to experience delays in any transaction that you try to accomplish (registration changes, converting paper bonds, changing bank accounts). They just seem to be overwhelmed in general. Also know that if your password in compromised, they will not replace any lost or stolen savings bonds.

Bottom line. Savings I bonds are a unique, low-risk investment that are linked to inflation and only available to individual investors. You can only purchase them online at TreasuryDirect.gov, with the exception of paper bonds via tax refund. For more background, see the rest of my posts on savings bonds.

[Image: 1942 US Savings Bond poster – source]

Filed Under: Banking, Investing, Retirement, Savings Bonds //
Last updated: April 30, 2024
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Time to Redeem Older Savings I Bonds With Zero or Low Fixed Rates?

Posted on November 14, 2023 // 12 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

After the November 2023 fixed rate was announced to be higher at 1.3%, I’ve gotten a few questions about redeeming “old” Savings I Bonds with lower fixed rates (some at 0%) and buying these “new” ones instead. During this current 6-month period, a lot of them are also earning less than a 4% interest rate when you add the ~3.38% inflation rate. Here are some considerations in making that decision:

When was the fixed rate very low? The fixed rates on your Savings I Bonds were set based on the month of purchase (issue). You can find a list of fixed rates based on issue date here and here. With a few exceptions, look for fixed rates between 0% and 0.30% which occurred with issue dates between May 2008 and October 2018, and again between November 2019 and October 2022.

Find the issue date of your specific savings bonds at TreasuryDirect.gov or on the face of your paper bond.

3-month interest penalty for savings bonds held less than 5 years. So you’ve found the ones with very low fixed rates. But also remember, if you redeem before 5 years, you lose the final 3 months of interest completely. Your actual interest rate changes every 6 months, and so you can time which 3 months of interest you lose. You may want any period of high inflation to “run out” before you redeem.

Here are redemption dates if you want to time it such that the 3 months interest rate penalty you lose is the only first 3 months of the lower 3.38% inflation rate (which first started in May 2023). Some of the dates have passed, and the window is already open. I first saw this reported by TIPSWatch.

  • Issue month: November/May 👉 Redeem after August 1st, 2023
  • Issue month: December/June 👉 Redeem after September 1st, 2023
  • Issue month: January/July 👉 Redeem after October 1st, 2023
  • Issue month: February/August 👉 Redeem after November 1st, 2023
  • Issue month: March/September 👉 Redeem after December 1st, 2023
  • Issue month: April/October 👉 Redeem after January 1st, 2024

Annual purchase limits. Savings I Bonds have purchase limits of $10,000 per year per SSN (plus another $5,000 via tax return and other ownership title “loopholes”). So if you sell your past existing holdings, you can’t necessarily turn around and buy double or triple your usual amount this year at the higher fixed rate. If aren’t coming close to exceeding the purchase limits, then this is not a concern, and selling savings bonds at 0% fixed rate and buying at 1.3% fixed rate may be a simple and smart move.

Alternatively, you may wish to sell your 0% fixed rate bonds and purchase individual TIPS of a specific maturity instead due to the current higher real yields. I Bonds and TIPS have both similarities and important differences, one of which is that you can never lose money (nominally) with a savings bond, but your long-term TIPS may drop by 10% or more in the short-term.

Tax deferral. Savings bonds have a unique feature that you can defer paying any taxes until you redeem them (or until they mature after 30 years). If you redeem your savings bonds now, you will have to pay any taxes on all of the accumulated interest this tax year. The tax deferral and thus tax-free compounding can increase your overall return if you don’t have other tax-deferred space available. In addition, if your marginal tax rate is very high right now, but you expect it to be much lower in the near future (perhaps in retirement), then you may wish to wait a bit.

My overall take? As you can see, there are lots of little details and exceptions, but… If you’re using savings bonds as a short-term cash reserve or otherwise have another good place for the money, then it’s probably best to sell your 0% fixed rate bonds and re-invest in alternatives.

However, if you’ve been building up a big pile for long-term inflation protection combined with flexibility with taxes and withdrawals, and you are just buying up to the limits every year already, and don’t have other pressing needs for that money, then I don’t feel you’ll be hurt horribly by holding.

Personally, I’ll probably be selling most if not all of my 0% fixed rate bonds over time, with sensitivity to my overall tax brackets. I plan to reinvest into long-term TIPS at 2%+ fixed real rates as tax-deferred space is available.

Filed Under: Investing, Savings Bonds //
Last updated: November 14, 2023
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Savings I Bonds November 2023: 1.30% Fixed Rate, 5.27% Total Composite Rate

Posted on November 1, 2023 // 8 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Savings I Bonds bought from November 1, 2023 through April 30, 2024 will have a fixed rate of 1.30%, for a total composite rate of 5.27% for the first 6 months. The semi-annual inflation rate is 1.97% as predicted (3.94% annually), but the full composite rate is dependent on the fixed rate for each specific savings bond and so it is a little bit higher. This total composite rate is a bit lower than current short-term Treasury yields, and the fixed rate is about 1% lower than that of current short-term TIPS yields. Press release.

Every existing I Bond will earn this inflation rate of ~3.96% eventually for 6 months; you will need to add your own fixed rate that was set based the initial purchase month. See you again in mid-April for the next early prediction for May 2024.

Original post from 10/13/23:

Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. With a holding period from 12 months to 30 years, you could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the November 2023 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what a October 2023 savings bond purchase will yield over the next 12 months, instead of just 6 months. You can then compare this against a November 2023 purchase.

New inflation rate prediction. March 2023 CPI-U was 301.836. September 2023 CPI-U was 307.789, for a semi-annual inflation rate of 1.97%. Using the official composite rate formula:

Composite rate formula: [Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

This results in the variable component of interest rate for the next 6 month cycle being ~3.94% to 3.96% if you use a fixed rate of between 0% and 1%.

Tips on purchase and redemption. You can’t redeem until after 12 months of ownership, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A simple “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month – same as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month.

Buying in October 2023. If you buy before the end of October, the fixed rate portion of I-Bonds will be 0.90%. You will be guaranteed a total interest rate of 0.90 + 3.40 = 4.30% for the next 6 months. For the 6 months after that, the total rate will be 0.90 + 3.96 = 4.86%.

Comparing with the best interest rates of October 2023, these rates lower than what is available via regular nominal Treasury bonds and other deposit accounts.

Buying in November 2023. If you buy in November 2023, you will get ~3.96% plus a newly-set fixed rate for the first 6 months. The new fixed rate is officially unknown, but is loosely linked to the real yield of short-term TIPS. My rough guess is somewhere between 1% and 1.5%. The current real yield on short-term TIPS is higher than it was during the last reset, when the fixed rate was set at 0.9%. Every six months after your purchase, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your specific purchase month. Your bond rate = your specific fixed rate (based on purchase month, look it up here) + variable rate (total bond rate has a minimum floor of 0%).

Buy now or wait? Between those two options, I would buy in November as you’ll likely get a slightly higher fixed rate and a higher initial inflation rate. If you’ve already bought for 2023, you’ll eventually get the newer inflation rate after six months. However, right now you might prefer to buy TIPS instead (especially if you have tax-deferred space available) as they will likely have a higher real yield.

Unique features. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and potential tax benefits if used toward qualified educational expenses.

Over the years, I have accumulated a nice pile of I-Bonds and consider it part of the inflation-linked bond allocation inside my long-term investment portfolio.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. You can only buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888. If you have children, you may be able to buy additional savings bonds by using a minor’s Social Security Number. TheFinanceBuff has a nice post on gifting options if you are a couple and want to frontload your purchases now. TreasuryDirect also allows trust accounts to purchase savings bonds.

Concerns about TreasuryDirect customer service. Opening a TreasuryDirect account or conducting other transactions can sometimes be a hassle as they may ask for a medallion signature guarantee which requires a visit to a physical bank or credit union and snail mail. This doesn’t apply to everyone and seems to have gotten better recently, but plan to experience some delays in any transaction that you try to accomplish (registration changes, converting paper bonds, changing bank accounts). They just seem to be overwhelmed in general.

Bottom line. Savings I bonds are a unique, low-risk investment that are linked to inflation and only available to individual investors. You can only purchase them online at TreasuryDirect.gov, with the exception of paper bonds via tax refund. For more background, see the rest of my posts on savings bonds.

[Image: 1942 US Savings Bond poster – source]

Filed Under: Banking, Investing, Retirement, Savings Bonds //
Last updated: November 1, 2023
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Criminals Are Cashing in Fake Savings I Bonds With Authentic Serial Numbers

Posted on October 7, 2023 // 4 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Many of us have bought Series I Savings Bonds in the past, and it appears criminals have also been taking notice. From the CNBC article California woman pleads guilty in $1.6 million counterfeit Series I savings bond scheme:

A California woman pled guilty to helping process more than $1.6 million in counterfeit Treasury Department Series I savings bonds through financial institutions around the United States, the Department of Justice said Thursday.

Summer Marie Creech, 45, forged counterfeit I bonds using authentic bond numbers and sent them to co-conspirators who used stolen identification to redeem the forgeries at financial institutions in south Texas and elsewhere, according to the DOJ.

A concerning detail here is that the articles states she used authentic bond serial numbers. Where did she get them? Are they issued in some sort of predictable order or algorithm? Did they find some banks that just paid out cash?

How do I know that someone else hasn’t already redeemed a counterfeit savings bonds with MY serial number(s) on it? I can only look up the value based on issue date at TreasuryDirect.gov Paper Savings Bond Calculator (you can enter any serial number you like). There is no way to confirm if my specific serial number has already been cashed in (by me or by someone else). This may be another reason for me to convert the paper savings bonds into the electronic version and track it online. I’ve been turned off by the very long wait times recently along the possibility of it being lost in the mail, but I may have to bite the bullet.

Filed Under: Savings Bonds //
Last updated: October 7, 2023
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Savings I Bonds May 2023 Inflation Rate: 0.90% Fixed, 4.30% Total Composite Rates

Posted on April 30, 2023 // 8 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

May 2023 fixed rate will be 0.90%, total composite rate is 4.30% for next 6 months. For Savings I bonds bought from May 1, 2023 through October 31, 2023, the fixed rate will be 0.90% and the total composite rate will be 4.30%. The semi-annual inflation rate is 1.69% as predicted (3.38% annually), but the full composite rate is dependent on the fixed rate for each specific savings bond and so it is a little bit higher.

Every single I bond will earn this inflation rate of ~3.40% eventually for 6 months, depending on the initial purchase month. The fixed rate was higher than I predicted, although still a bit lower than short-term TIPS yields. You may wish to wait until October if you don’t like what you see right now. See you again in mid-October for the next early prediction for November 2022.

Original post from 4/12/23:

Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. With a holding period from 12 months to 30 years, you could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at BLS.gov, which allows us to make an early prediction of the May 2023 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what a April 2023 savings bond purchase will yield over the next 12 months, instead of just 6 months. You can then compare this against a May 2023 purchase.

New inflation rate prediction. September 2022 CPI-U was 296.808. March 2023 CPI-U was 301.836, for a semi-annual increase of 1.69%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be ~3.38%. You add the fixed and variable rates to get the total interest rate. The fixed rate hasn’t been above 0.50% in over a decade, but if you have an older savings bond, your fixed rate may be up to 3.60%.

Tips on purchase and redemption. You can’t redeem until after 12 months of ownership, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A simple “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month – same as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month.

Buying in April 2023. If you buy before the end of April, the fixed rate portion of I-Bonds will be 0.40%. You will be guaranteed a total interest rate of 0.40 + 6.49 = 6.89% for the next 6 months. For the 6 months after that, the total rate will be 0.40 + 3.39 = 3.79%.

Let’s look at a worst-case scenario, where you hold for the minimum of one year and pay the 3-month interest penalty. If you theoretically buy on April 30th, 2023 and sell on April 1st, 2024, I estimate that you’ll earn a ~4.48% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. If you theoretically buy on April 30th, 2023 and sell on July 1, 2024, you’ll earn a ~5.07% annualized return for an 14-month holding period. Comparing with the best interest rates as of April 2023, these short-term rates are roughly on par on what is available via regular nominal Treasury bonds and other deposit accounts.

Buying in May 2023. If you buy in May 2023, you will get 3.38% plus a newly-set fixed rate for the first 6 months. The new fixed rate is officially unknown, but is loosely linked to the real yield of short-term TIPS. My rough guess is somewhere between 0.2% and 0.5%. The current real yield on short-term TIPS is lower than it was during the last reset, when the fixed rate was set at 0.4%. Every six months after your purchase, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your purchase month. Your bond rate = your specific fixed rate (based on purchase month, look it up here) + variable rate (total bond rate has a minimum floor of 0%). So if your fixed rate was 1%, you’ll be earning a 1.00 + 3.38 = 4.38% rate for six months.

Buy now or wait? If you buy in April, you will get the remnants of the last period of higher inflation, and a fixed rate that won’t change much for May. If you wait until May, there may be a small possibility that the fixed rate might go up, but even if it does, it will take a while for that to breakeven due to the lower initial inflation rate. Therefore, my opinion is that I would purchase now in April. Note that the real yields on TIPS are currently about 1.2% for a 5-year term, higher than the fixed rate for I bonds.

Unique features. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and educational tax benefits.

Over the years, I have accumulated a nice pile of I-Bonds and consider it part of the inflation-linked bond allocation inside my long-term investment portfolio.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. You can only buy online at TreasuryDirect.gov, after making sure you’re okay with their security protocols and user-friendliness. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888. If you have children, you may be able to buy additional savings bonds by using a minor’s Social Security Number. TheFinanceBuff has a nice post on gifting options if you are a couple and want to frontload your purchases now. TreasuryDirect also allows trust accounts to purchase savings bonds.

Note: Opening a TreasuryDirect account can sometimes be a hassle as they may ask for a medallion signature guarantee which requires a visit to a physical bank or credit union and snail mail. This doesn’t apply to everyone and seems to have gotten better recently, but the takeaway is don’t wait until the last minute.

Bottom line. Savings I bonds are a unique, low-risk investment that are linked to inflation and only available to individual investors. You can only purchase them online at TreasuryDirect.gov, with the exception of paper bonds via tax refund. For more background, see the rest of my posts on savings bonds.

[Image: 1950 Savings Bond poster from US Treasury – source]

Filed Under: Banking, Investing, Retirement, Savings Bonds //
Last updated: April 30, 2023
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Alternative Ways To Track Savings I Bond Values (Tools and Calculators)

Posted on April 23, 2023 // 8 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

If you have accumulated some savings bonds but don’t really enjoy logging into TreasuryDirect.gov all the time, here are some alternative methods to tracking your balances over time. Each has its own strengths and weaknesses, and the unofficial ones are the results of motivated DIY investors. As an example, I will track a Savings I Bond purchased in April 2013 for $10,000.

Official TreasuryDirect Savings Bond Calculator

Although this official calculator states that it is only meant for paper savings bonds, you can still use it indirectly to track electronic savings bonds (they have the same value as long as they are issued the same month). For example, let’s say you bought $10,000 of I Bonds issued in April 2013. While you can’t enter a $10,000 value directly, you can enter two $5,000 I Bonds. (Enter anything for serial number.) Thus, you’d see that as of April 2023, they are worth $12,636.

You can even save your entire inventory of specific I bonds if you follow the directions here. It feels a bit archaic (you’re basically saving a plain text .html file), but it works. You can even import the values into Google Sheets, according to this Bogleheads forum post.

EyeBonds.info

Created by a user on the Bogleheads forums, this is a very handy and simple website that tracks the price of every savings bonds based on the issue date. For April 2013, simply click on that date and see the growth in value shown below. As of April 2023, you get the same $12,636 value and since the rate is known for the next 6 months as well, you can see the value all the way out to October 2023. This may lead to the easiest way to import the values into your own custom Google Sheet; check out Bogleheads forum post.

eWorkpaper I Bond Calculator

This site also allows you to look up the price history of savings bonds based on the issue date. For April 2013, there are the same ending values along with a chart comparing the value against CPI inflation. You can also quickly create a list of multiple savings bonds here, although it doesn’t appear to allow you to save it for later.

(I personally use these tools once in a while for research, but for tracking balances I simply log into TreasuryDirect.gov during my quarterly portfolio updates and manually enter the values into my Google Sheets page under the “Inflation-Protection Bonds” asset class. It’s only four times a year, and I like to log into the official retro website to make sure my money is still there.)

Filed Under: Banking, Savings Bonds, Tools & Calculators //
Last updated: April 23, 2023
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

William Bernstein on Holding Both Treasury Bonds and TIPS (or Savings I Bonds)

Posted on April 16, 2023 // Leave a Comment
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sb_posterWilliam Bernstein has a new article titled Riskless at Age 104 in which he outlines why he just bought some 30-year Treasury Inflation-Protected Securities (TIPS) that won’t mature until he is 104 years old. Despite that distracting headline, the article is more about the reasons why you might want to hold both traditional US Treasury bonds that pay a stated rate and TIPS that pay a stated rate above inflation.

Here’s a quote that is nearly the answer to a riddle: What is risky in the short run but riskless in the long run? What is the opposite?

A TIPS is risky in the short term and riskless in the long run, which is precisely the opposite of, and complementary to, a T-bill, which is riskless in the short term but, because of reinvestment rate volatility, risky in the long run.

In the end, Dr. Bernstein recommends holding both:

To summarize, TIPS and T-bills are complementary assets. The former appeals to our System 2’s inner Spock, who first and foremost wants to secure our future consumption, while the latter assuages our System 1’s inner Daffy Duck, who wants us to bail at the worst possible time and violate Charlie Munger’s first rule of compounding, which is to never interrupt it.

The prudent retiree holds a goodly pile of both.

I also split the bond portion of my portfolio between safe traditional bonds (and cash and CDs) and safe inflation-protected bonds. My take:

  • Cash, which can be held in the form of short-term Treasury Bills or cash deposits in an FDIC-insured bank account, satisfies our System 1 “reptile brain”. It’s simple, reliable, and easy to understand. It may not keep up with inflation perfectly, but it also moves around a lot less.
  • TIPS and I Savings Bonds, which allow you to remove the variable of unexpectedly high inflation over long period of time (up to 30 years out), satisfies our System 2 “rational brain”. As a long-time holder, I can attest that it fluctuates in unpredictable ways and is not that much fun to hold. It’s actually like stocks in that price seem to drop in times of crisis. You have to really understand the inner workings, but if you do then it becomes a form of long-term insurance against unexpectedly high inflation.

This is also why I’m still buying Savings I Bonds every year even though the headline rates are not as crazy anymore. I don’t buy them as a substitute for short-term cash, but as a form of long-term insurance policy. When inflation spiked up to 8%+, it wasn’t just $10k of I Savings Bonds that I bought in 2022 that went up 8%+. My entire stash of I Savings Bonds slowly accumulated over a decade or more went up 8%+. I will admit, it felt nice that something went up in 2022. Savings I Bonds also never go down in value (unlike TIPS), so in a way they are the least stressful way to hold inflation-protected bonds.

Filed Under: Banking, Investing, Savings Bonds //
Last updated: April 16, 2023
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

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Paper Savings Bonds: Pay w/ Credit Card by 1/17, Use Tax Refund To Increase Purchase Limit by $5,000

Posted on January 11, 2023 // 2 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

As inflation spiked, so did interest in purchasing inflation-linked Series I Savings bonds. Some folks have been going to extra lengths to increase their ability to purchase them, buying savings bonds for kids, trusts, LLCs, corporations, and so on. One of the more direct ways to increase your annual purchase limits is to use IRS Form 8888 when filing your taxes this year, which allows you to use your tax refund to purchase up to $5,000 in paper Savings Bonds each year. This is on top of the $10,000 annual limit on electronic savings bonds per person at TreasuryDirect.

Of course, that means you need to have a refund when you file your taxes. You’ll need to estimate your tax liability, and if needed, you can make an overpayment on your federal tax withholding to ensure you have the refund size you want. The deadline for 2022 4th Quarter estimated tax payments is Tuesday, January 17th, 2023.

You can make a direct payment via credit or debit card via various official processors. The processing fee starts at just 1.85%, which means that as long as you have 2% cash back rewards card or better, you can actually come out slightly ahead. Even better, paying $4,000 in taxes would satisfy most of the spending hurdles on big credit card bonuses worth well over $500. Two birds, one stone.

You can also make a direct payment via your bank account at EFTPS.gov or IRS DirectPay.

Right now is the best window, as it minimizes the time between paying the taxes and receiving your paper savings bonds. Filing your taxes earlier will also shorten that window. If you wish, you can later convert those paper savings bonds to electronic form at TreasuryDirect.

Filed Under: Banking, Credit Cards, Deals & Offers, Savings Bonds //
Last updated: January 11, 2023
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

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