Clarification Of Savings Bond Interest

  |     |   7 posts since 2011

In Ken's October 19 post about Series I savings bongs, he mentioned that they increase in value the first of each month. I purchased some I bonds in November (both paper and electronic) and their issue date shows up as "11/2011". However, no interest has been added to the value of the electronic bonds in my TreasuryDirect account as of December 8. When I use TD's savings bond calculator and put in my bond information, it says the "next accrual date" is not until March 2012. I must not be understanding how/when the interest is added. Can anyone provide clarification?

Ken Tumin
  |     |   6,078 posts since 2009
The TreasuryDirect and the calculator may take into account the 3-month early withdrawal penalty.

According to the TreasuryDirect site, "Interest, if any, is added to the bond monthly and is paid when you redeem the bond".
  |     |   7 posts since 2011
I suspected it might be something like that, but I couldn't find anything online to explicitly confirm. The math does add up: if you ask the TD calculator for the value "as of" 03/2012, it only shows one month's worth of interest added to the value of the bond. It seems like the calculator assumes you are intending to redeem the bond, so it's incorporating the penalty. Kind of weird. Just because I want to know the value of my bonds doesn't mean I'm intending to redeem them immediately (not that I even could, given the 12-month minimum). It would make more sense if they would show both the current value as well as the amount you would receive if you were to incur an early withdrawal penalty.

Thanks for pointing me in the right direction!

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