As suggested by my When Should You Redeem I Savings Bonds Calculator, I redeemed a $5,000 I-Bond purchased in October 2005 on Tuesday. I ended up receiving $298 in interest over a holding period of 14 months (I bought at the very end of October). Since the interest is exempt from state-income taxes, my effective interest rate was around 5.8%. I did it all online at TreasuryDirect.gov and the money should be in my bank account within two days.
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I am thinking about the same thing, but what to do with the redeemed money? Should I keep buying I-bond or simply move to online banks?
I too cashed out my I-bond from Oct 2005 (Thanks for the calculator that confirmed my own figures.) I sent the request Jan 1st and had the money in my account yesterday, transaction is listed today at my bank online, very fast turnaround by the treasury, I was impressed.
Interesting, I also bought $5k worth of I Bonds in late October 2005 and redeemed them on Jan 1st. The $5298 showed up in my account yesterday, but my tax equivalent yield is more like 5.5% due to my lower state tax rate.
DJ, depends on how soon you need the money. I-Bonds aren’t really earning that much right now, unless you have a great fixed rate. There are some PenFed CDs at 6.25% if you want to lock your money up for while or online banks at 5+% with more liquidity.
I wish all banks were as timely as TreasuryDirect with their transfers.
I have not been able to figure out whether I would be better off with my money in one of my 5+% savings accounts, party because I just can’t understand financial talk.
I bought my I-bond in January 2003, and the site says “Interest rate: 4.72%”. Should I still redeem it? I’m baffled.
Thanks,
Amanda
Since I never know when a crisis or new opportunity will come along, I like to keep my money in a more liquid form. I prefer the new online banking accounts because they get a 5+ % interest rate and can be moved around if need be. Locking my money up for a few years for an extra point just doesn’t cut it for me.