How To Buy I Bonds – I Bonds are short for ‘series I savings Bonds’. I Bonds are issued by the U.S government directly to retail investors, currently, I bonds carries favorable interest rates over other CDs and bonds.
What is an I Bond?
As mentioned earlier, I bond is short for series I saving bond which is a security that earns interest based on both a fixed rate and a rate that is set twice a year based on inflation. The bond earns interest until it reaches 30 years or you cash it, whichever comes first.
The Interest Rate of an I bond you could sell today
For the first six month, you own an I bond, the series I bond sell from November 2021 through April 2022 earns interest at an annual rate of 7.12%. A new rate will be set every six months based on this bond’s fixed-rate (0.00%) and on inflation.
Who may own an I bond?
- Individuals: Any individual that has a social security number and meets any one of these three conditions:
- United States citizen, whether you live in the U.S or abroad.
- United state resident
- A civilian employee of the united state, no matter where you live.
NOTE: To buy an electronic I bond, you must first establish a TreasuryDirect account.
- Children under 18: You can own an I bond if you meet one of the conditions above for individuals. Information concerning electronic and paper bonds:
- Electronic bonds in TreasuryDirect: A child may not open a TreasureDirect account, buy securities in TreasuryDirect, or conduct other transactions in TreasuryDirect. A parent or other adult custodian may open an account for the child a TreasuryDirect account that is linked to the adults TreasuryDirect account. The parent or custodian can buy securities and conduct other transactions for the child, and other adults can buy saving bonds for the child as gifts.
- Paper bonds: Adults can buy bond in the name of a child.
- Trust, estate, corporation, partnership, and some other entities: Electronic bonds (In TreasuryDirect): the mentioned entities can buy an I bond in TreasuryDirect.
- Paper bonds:
- Trust and estates: In some cases, yes can buy I bonds.
- Corporates, partnerships, other entities: No are not allowed to buy I bonds
- Paper bonds:
How can I Buy I bonds
There are two options to buying I bonds, which are outlined below:
- Buy them in electronic form in TreasuryDirect online Program: Open a TreasuryDirect official account; In your treasury direct account, you can purchase and hold Treasury bills, Notes, Treasury Inflation-Protected Securities (TIPS), and saving bonds, and it is available to you 24 hours a day, 7 days a week.
- Buy them in paper form using your Federal Income Tax Refund learn more about Federal Income Tax Refund on TresuryDirect.
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How much in I bonds can I buy for myself?
In a calendar year, you can acquire:
- up to $10,000 in electronic I bonds in TreasuryDirect
- up to $5,000 in paper I bonds using your federal income tax refund
Two points:
- The limits apply separately, meaning you could acquire up to $15,000 in I bonds in a calendar year
- Bonds you buy for yourself and bonds you receive as gifts or via transfers count toward the limit. Two exceptions:
- If a bond is transferred to you due to the death of the original owner, the amount doesn’t count toward your limit
- If you own a paper bond issued before 2008, you can convert it to an electronic bond in your account in TreasuryDirect regardless of the amount of the bond. (The annual limit before 2008 was greater than today’s limit of $10,000.