Here’s a reminder regarding an opportunity to buy savings bonds near the end of May and receive an annualized return of 2.51% over the next 11 months. This would be 1% more than the highest current CD rates, with potential for continued higher interest. See this previous post for more details. The main catch to this opportunity is that you will not be able to sell your savings bonds at all for the next 11 months.
The reason why you want to buy at the end of the month is that savings bonds are labeled by month, and as long you buy anytime in May, it will be stamped with a May 2011 date. Then, on the first day of May 2012, you can redeem for an entire year’s worth of interest. However, you don’t want to miss the deadline, because then your bond will end up an April 2011 bond. The annual purchase limit is currently $5,000 in paper I-bonds and $5,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year.
For electronic bond purchases, Ken of DepositAccounts conducted an experiment as to how late you can wait to buy them on TreasuryDirect. To summarize, in order to avoid this, you should enter your purchase order a minimum of two business days before the last day of the month. For peace of mind, I would pad it 4 business days. You can schedule your purchase ahead of time online (recommended).
For paper bond purchases, you can visit your local bank and ask to buy them. Here are detailed instructions. Not all banks do this, so check ahead of time. The issue date of the savings bond will be the same day that the bank accepts payment. This date will be noted clearly on the application, and the bank should also stamp it to confirm. In this case, if you are familiar with the bank and you have the money available, you could conceivable wait until the last day the bank is open before the end of the month. Again, I’d try a couple days beforehand to be safe.
By Jonathan Ping | Savings Bonds | 5/20/11, 5:00am