I bond redemption timing

Tuesday, April 18th, 2006
Categorized as: Yesterday's News (old post archive)

If I want to redeem an I Bond that was bought 5/11/05, what is the earliest date I can do so outside the three-month penalty window? I don’t want to lose any of the 6.73% currently being paid.

Tom’s Response

The May 05 I bond has a fixed base-rate of 1.20%, so it actually earned 4.80% in its first six-month rate period (May-Oct) and 6.93% in its second (Nov-Apr).

If you’re not happy with the rate for its next rate period, which we’ll be able to figure out after the CPI is announced tomorrow, you can cash it on August 1 and forfeit May, June, and July’s interest.

The yield on this 15-month investment will be about 4.68%.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:


On July 8th, 2006 steven isaacson said:

tom-the earilest date to cash in an i bond issued 5/05 without forfiting the 6.73% would be july lst because counting back 3 months penalty would be july,june,may 2006.you would get julys interest on the lst thank you

On July 9th, 2006 Tom Adams said:

Steven – July’s interest is added to the value of the bond on Aug 1, not on July 1. There’s a more detailed look at how this works at Hold off on Series I bond rollovers.

On July 16th, 2006 Mike McCune said:

I too thought I could redeem lower fixed rate I-bonds purchased since May ’03 and purchase (swap) for newer, higher fixed rates each month starting on august 1, but found by doing the math on my bond wizard using future dates that I was still receiving the higher rates of interest through october. Your link concerning “I-bond rollovers” and the actual rate periods helped confirm what I found. Why does the government make things so confusing? I’m still aggravated that they lowered the rate floor for EE’s back in ’93; I thought I had my money loaned out for a certain percentage that I wrote on the evelopes only to find out they paid less! I suppose that’s the equivalent to the market risk we think we don’t have with savings bonds. Thanks for the great website!

On July 16th, 2006 Mike McCune said:

Oops, I meant the higher rates would be paid through this month (July) and then I would have to wait the three months at the new lower rates and start in November to start swapping each month.

On May 29th, 2008 Rhoda said:

I have two $10,000 savings bond that my husbands mother, (both deceased) purchashed for my husband. Am I able to redeem these bonds? Also, what will be the next interest payment date this year? Is it August 1, 2008? If so, how much will it be?

On May 29th, 2008 Tom Adams said:

Hi Rhoda – I can’t answer your questions because there is too much missing information. I suggest you spend a weekend reading my book.

Tom Adams

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June 1, 2010

After six years, over 400 posts, 3,680 real comments, and over 90,000 spam comments (thank you, Akismet, for making managing a blog with comments possible), I am closing public comments on Savings-Bond-Advisor.com. I will contine to update the main articles on this site, but not the comments.

Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for. If you have a copy of Savings Bond Advisor, you can ask me a question here.

Tom Adams

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