The Center For Debt Management
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Bonds Investor's Guide

Here Are Some of The I Bond's Attractive Features:

  • I Bonds are based on a straightforward idea.They're sold at face value and grow with inflation-indexed earnings for up to 30 years.

  • I Bonds are affordable.You can invest as little as $50 or as much as $30,000 per year.

  • I Bonds are safe. They're U.S. Treasury securities backed by the full faith and credit of the United States Government.

  • I Bonds have tax advantages. You can defer Federal taxes on earnings for up to 30 years, and I Bonds are exempt from state and local income taxes. The best part is you don't need to do anything to get these benefits—they're built right into I Bonds.

  • I Bonds will usually increase in value every month, and interest is compounded semiannually.

  • I Bonds are liquid. They can be turned into cash any time after six months.

And remember, buying I Bonds goes a long way toward solving the biggest problem that all investors face: finding a way to save that guarantees that inflation won't eat away the value of their savings. For example, if inflation averages only 2 1/2 percent, in just 10 years it will take $1.28 to equal to today's dollar. That means your savings would have to earn 2 1/2 percent just to stay even. Because I Bonds pay a rate of return over and above changes in the Consumer Price Index for all Urban consumers (CPI-U), you'll always keep up.

How do you set the I Bond Earnings Rate?

The earnings rate of an I Bond is a combination of two separate rates: a fixed rate of return and a variable semiannual inflation rate. The fixed rate remains the same throughout the life of the I Bond, while the semiannual inflation rate can vary every six months.

Each May 1 and November 1, the Treasury announces a fixed rate of return that applies to all I Bonds issued during the six month period beginning with the effective date of the announcement. The fixed rate of return carried by any given I Bond will never change.

Also, every May 1 and November 1 the Treasury determines a semiannual inflation adjustment ratebased on changes in the Consumer Price Index for all Urban consumers (CPI-U). The semiannual inflation rate announced in May is a measure of inflation over the preceding October through March; the rate announced in November is a measure of inflation over the preceding April through September.

The CPI-U is published monthly by the Department of Labor's Bureau of Labor Statistics. The semiannual inflation rate is then combined with the fixed rate of an I Bond to determine the bond's Earnings Rate for the next six months.

How do you apply the Earnings Rate to my I Bonds?

Like this: Let's say you buy your I Bond in October. Your I Bond will grow at an Earnings Rate we announced in May. Six months later, in April, your I Bond will pick up the Earnings Rate announced in the previous November. So twice a year — on the anniversary and semiannual anniversary of its issue date — the Earnings Rate of your I Bond will change to reflect an adjustment for inflation. Remember, the fixed rate of return, the rate your bond earns over inflation, stays the same.

How much do I Bonds cost?

I Bonds fit all budgets. They are sold at face value in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000. This makes it easy to keep track of how your bonds grow.

When are earnings added to the I Bond?

Earnings are added to the bond each month, and interest is compounded semiannually. I Bonds increase in value on the first day of the month. An I Bond's issue date is the month and year when the full issue price is received by an I Bond issuing agent.

How long will my I Bond earn interest?

I Bonds earn interest for up to 30 years.

If I need the money, when can I cash them in?

You can cash your I Bond any time after six months and get your original investment plus earnings. However, I Bonds are meant to be longer term investments. So if you cash a bond within the first five years, you will forfeit three-months' earnings.

Can I ever lose money in I Bonds?

No. I In the rare event that the CPI-U goes down so the decline is greater than the fixed rate, your bonds will not decrease in value. The value of the bond will be maintained until the earnings rate will again produce an increase in value. So, not only do I Bonds protect your purchasing power from inflation, you can't lose even if there is significant deflation.

Is there a limit on how much I can invest each year in I Bonds?

Yes. You can only buy up to $30,000 worth of I Bonds each calendar year.

Who can buy I Bonds?

U.S. citizens and residents of any age with a Social Security Number can buy I Bonds.

How do I buy I Bonds?

You can order I Bonds at banks and thrift institutions. YAll you need to do is fill out a simple purchase order, pay for the bond, and your I Bond will be mailed to you within three weeks. I Bonds are also available through employer-sponsored payroll savings plans. Check with your employer to see if I Bonds are available where you work. If not, let them know you're interested.

Where can I redeem I Bonds?

Most banks and thrift institutions serve as paying agents for I Bonds. If they redeem Series EE Bonds, they also redeem I Bonds.

I was thinking about using I Bonds as part of my children's college fund. Is there a tax break the same for I Bonds as for Series EE Bonds?

Yes. If you qualify, you can exclude all or part of the interest on I Bonds from income as long as the proceeds are used to pay for tuition and fees at eligible post-secondary educational institutions. Details are available in IRS Publication 550, "Investment Income and Expenses." Contact your nearest Internal Revenue Service District Office to get this publication.

Can I give I Bonds as gifts?

Yes. I Bonds make great gifts for all occasions. You can have I Bonds sent to you for presentation or directly to the person receiving the gift. Ask for a free gift certificate where you buy I Bonds.

Can I change the registration on I Bonds?

Yes, but there are some restrictions. Check with your bank or visit to find out what transactions are available.

What if I lose my bonds or they're destroyed?

If your I Bonds are lost, stolen, or destroyed, they can be replaced free of charge as long the Bureau of the public Debt can establish that the bonds are either still outstanding or have been erroneously paid. I Bond owners can apply for replacement to the Bureau of the Public Debt, Parkersburg, West Virginia 26106-1328. Many banks stock the replacement application form, PDF 1048, or you can get it at

You can help the replacement process along by keeping records of your bond serial numbers, issue dates (month and year found in the upper right-hand corner of a bond), registration (names and addresses), and the Social Security or Taxpayer Identification numbers in a safe place separate from the bonds. Getting the Savings Bond Wizard makes this easy. The Wizard is a gree computer program published by Public Debt that lets you keep an inventory of your bonds and also lets you know their current value. You can download the Wizard from the savings bonds website.

Is there information on the Internet about I Bonds?

Yes. Check out You'll find a wealth of information at the website on the new I Bond. There's information about savings bonds, and other Treasury securities there as well. You can download the Savings Bond Wizard, order forms or even e-mail our experts with questions and comments.

I'm not on-line yet; how else can I get more information?

You can write to:
Bureau of Public Debt
Savings Bond Operations Office
Parkersburg, WV 26106-1328.

Or call to get current rate information at 1-800-4US-BOND or 1-800-487-2663.

Is there anything else I should know about bonds?

Yes. The CPI-U is reported by the Bureau of Labor Statistics. The Bureau of Labor Statistics operates independantly of Treasury and Treasury has no control over the determination, calculation, or publication of the index. The regulations for the I Bond set forth the actions Treatury will take in the event the CPI-U is revised, rebased, discontinued, or fundamentally altered.

In addition, there can be a significant lag between the date the CPI-U is determined and interest is credited to an I Bond.

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