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

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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:


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from which I make a partial redemption of $1000 after twelve months, will the 3-month interest penalty applied to the withdrawn $1,000 also apply to the remaining $4,000 balance, even if I wait the full 30 years to take out the remaining $4,000?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,


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!

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    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 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.

  2. 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%

  3. 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.

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