The government’s anti-inflation savings bond is currently like a Birkin bag – highly coveted.
With the stock market collapsing and inflation rising, people are desperate for a place to park their extra cash.
Paying 9.62%, the relatively unknown and inflation-resistant Series I savings bond became a hit with $17.5 billion sold in the six months ending May, according to the Treasury Department. .
That compares to $364 million in I bond sales for all of 2020.
If you have money earning just over 1% or even as much, I bonds are an attractive offer.
There are a few things you need to know before buying an I Bond.
- You must open an account with TreasuryDirect.gov to purchase the bonds.
- The interest rate on the new Series I Savings Bonds is 9.62% until October 2022.
- Individuals can only purchase up to $10,000 in e-Bonds I each calendar year. If your purchase exceeds this limit, the Treasury may take up to 16 weeks to process a refund. (You can also buy up to $5,000 in paper I bonds using your federal tax refund).
- You pay the face value of the bond. For example, you pay $25 for a $25 bond.
- You cannot cash in the I bond for at least a year. If you redeem the bond before five years, you lose the previous three months of interest.
- You must pay federal taxes on the interest.
Now, here’s a step-by-step guide to buying I bonds, which starts with creating an account at TreasuryDirect.gov.
1. Be patient. Seriously. The website states that setting up the account takes 10 minutes. It may be for some people if all goes well. This was not the case for me and my husband. It took me 20 minutes to complete the initial setup, and in the end I couldn’t create an online account (more on that later.) It took my husband about 30 minutes with a snafu on his part. If there is a problem or you make a mistake, the process of fixing it is frustrating and archaic.
And in May, so many people rushed to TreasuryDirect to buy the government savings bond that the website crashed.
2. Go to TreasuryDirect.gov. Under ‘Account Login’, click the link to open an account. If you don’t know how to navigate the process, take the guided tour. I also recommend that you watch the video on how to create an account. Many readers have reported experiencing issues while setting up their account and are now struggling to contact a live person to help them figure out what went wrong.
3. To create an account, you will need a tax identification number, such as your social security number. You must also have an address in the United States. You need an email address. You must provide at least one phone number.
4. There is a section to add your banking information, which will be the account you will use to purchase the bonds. It must be a checking or savings account. Check this part three times before clicking submit. If you’re wrong, you’re transported back a few decades to a system that can’t handle online change. (More on this later).
5. You will follow several additional steps to set up your account, including creating a password, choosing a custom image, and selecting security questions. Make sure to choose a strong password and security questions that cannot be obtained by searching your social media accounts. If you post a lot about your Goldie fish or your beloved dog Champ, don’t choose this as an answer to a security question: what was the name of your first pet?
6. Once you have created your account, you will receive an email with your TreasuryDirect account number. When you log in to your account for the first time, you will receive a one-time password sent to your email address. Make sure the image you selected appears. Finally, you will enter the password you selected.
7. If you have successfully created an account, you can buy bonds electronically by transferring money from a checking or savings account.
My husband mistakenly entered the checking account number when we wanted the funds to come from a savings account. You cannot correct account information online. You must print a bank change form to change an existing bank in your TreasuryDirect account.
If that wasn’t frustrating enough, you must sign the paper form in the “presence of an authorized certifying officer available at a bank, trust company, or credit union and mail it to us for processing.” Ugh!
I triple verified all my information, but I was unable to create a TreasuryDirect account. Instead, I received an email that said in part, “We’re having trouble verifying the information you provided when signing up for your account. We’re not receiving any information related to verification issues. account.”
Now I have to go through a byzantine process to complete my account setup. Treasury says that for my protection, I must complete an account authorization form, have it signed at a bank “in the presence of a Certifying Officer,” and mail it to a Treasury post office box in Minneapolis.
Yes, we want strong security measures. Still what a ridiculous obstacle for people who are just trying to make their money work. Modernize security for God’s sake.
“We are working on changes that would allow notarization – instead of certification or guarantee – of an applicant’s signature on the TreasuryDirect Account Authorization Form (FS Form 5444),” a spokesperson sent. of the Treasury by e-mail.
Here is some good news. If you’re having trouble opening an account, you can buy an I bond until October 28 and you’ll still receive the 9.62% interest rate for six months.