Savings Bonds Purchased, $5 Oops, More on Partial Redemptions

October 25, 2005 By Jonathan Ping 3 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.

My $5,000 I-Bond online purchase looks like it went off today without a hitch at Treasury Direct. Well, almost. I didn’t pay attention to my BillPay along with my checking account balance and I ended up going below the $1,000 minimum on my Presidential checking account. Doh! At least it’s only a $5 low-balance fee and not a bounced check.

There was also a good question about partial redemptions of Savings Bonds – If you withdraw any of it early (less than 5 years), will you be paying a penalty on all future withdrawals, even if you wait more than 5 years? I e-mailed them (they don’t seem to have a phone number?), and the answer I got was no. Here’s my e-mail and their response:

My e-mail:

Hello,

I have a question regarding the partial redemption available now on electronic Savings Bonds. If, for example, I have a $5,000 I-Bond from which I make a partial redemption of $1000 after twelve months, will the 3-month interest penalty applied to the withdrawn $1,000 also apply to the remaining $4,000 balance, even if I wait the full 30 years to take out the remaining $4,000?

Thank you,

Jonathan

The response from TreasuryDirect:

Dear Jonathan,

The 3 month interest penalty will only apply to the partial amount you redeem.

Janie Marks
Customer Service Specialist

Just ask!

Filed Under: Savings Bonds
Last updated: August 5, 2006
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.

User Generated Content Disclosure: Comments and/or responses are not provided or commissioned by any advertiser. Comments and/or responses have not been reviewed, approved or otherwise endorsed by any advertiser. It is not any advertiser's responsibility to ensure all posts and/or questions are answered.

Comments

  1. sid says
    October 26, 2005 at 8:11 am

    http://biz.yahoo.com/usat/051024/13187154.html?.v=1

    Dan Pederson says buy it now since the fixed rate on I bonds may go down to 0.5% and you may get only that premium over the interest rate.
    Tom adams of http://www.savings-bond-alert.com says buy later becasue he thinks the fixed rate is linked to the TIPS rate and he expects it to be 1.3-1.5%.
    I am splitting my purchase between today and the end of nov. anyway I am not going to sell them anytime sooner and I dont buy that many $200-$400 worth each month, these are a savings of a last resort for me.

    Reply
  2. Jack says
    October 26, 2005 at 9:42 am

    Hi Jonathan,

    I was reading your Old post on buy I-bond Oct. vs. Nov., if you buy in Oct, wouldn’t the interest of 4.8% good only for the month of October, then starting Nov. the new rate would be 6.9% as predicted? From your post it seems rate 4.8% would be the rate until 3/06, am I wrong here? Can you clarify? Thanks.

    10/05 to 3/06: Fixed + Variable = 1.2% + 3.6% = 4.8%
    3/06 to 9/06: Fixed + Variable = 1.2% + 5.72% = 6.92%

    Reply
  3. Jonathan says
    October 26, 2005 at 10:02 am

    sid – yeah two “experts” predicting two completely different things about the fixed rate. THAT helps =)

    Jack – new variable rates are announced on Nov, but I-bonds adjust the rate they pay only once every six months. If you buy in October, the rate will stay at 4.8% until March, when it will adjust to the fixed rate announced in November.

    For example, if you buy in December, the rate will stay for 6 months, and then adjust in June, then again in December, etc.

    Reply

Speak Your Mind

*