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Here are a few things about i-bonds that the average joe may not know. Series I bonds with issue dates prior to February 2003 became eligible for redemption si

Here are a few things about i-bonds that the average joe may not know. Series I bonds with issue dates prior to February 2003 became eligible for redemption six months from the issue date. Bonds with issue dates of February 2003 and later are eligible for redemption one year from the issue date. However, if a bond is cashed within the first five years after its issue date, interest earned during the three months prior to cashing will be forfeited. Once a Series I bond is five years old, there is no interest penalty for redemption. Another problem, you will owe federal tax on the I bond interest when you cash it in. In general interest on treasury bonds is not taxable at the state level. I am not sure about local taxes, which have all sorts of one off rules. But the thing most miss about the I bonds is you receive no interest until maturity/cashing it in. So no compound interest. Hope that helps!

goldfish3 4y ago
>But the thing most miss about the I bonds is you receive no interest until maturity/cashing it in. So no compound interest. That's incorrect. I bonds compound semi-annually. https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/ https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds...
- bob_theslob646 4y ago
  Technically you are correct, but it is only when you cash them in. Please see this for other questions. >3). Tax Deferred - I-bonds do not throw off interest. You only owe tax on the internally compounding interest once the bonds are cashed in, which means you control when you pay tax. Always a good thing! https://www.reddit.com/r/personalfinance/comments/qprqpy/ibond_questions_answered/ https://www.reddit.com/r/personalfinance/comments/qprqpy/ibo...