nsx

Today's Wall Street Journal has an article explaining the advantages of Series I (inflation indexed) savings bonds. You can buy them at http://www.publicdebt.treas.gov/ols/olshome.htm

Apparently, you can use a credit card at no extra charge, and we all know what that means...

I wish I'd known about this earlier. It boosts the effective yield by 1% to 2%, essentially offsetting any early redemption penalty.

NoStressHere

So, if I use my Delta AMEX, and they are currently giving DOUBLE miles for all purchases, I get even more miles?

Question is, are these decent investments?

askworldtraveler

There are several threads on this - which I couldn't quickly locate with many of the details. I believe that with the AA Citibank card there is a annual max of $30,000 per Aadvantage account (not credit card ).

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Askworldtraveler, EXP,4 million AA miles+++

bdschobel

Federal law limits the annual purchases of savings bonds by any individual to $30,000.

The government doesn't take AMEX for this purpose, but they take VISA (which I used).

Bruce

NoStressHere

On the Q&A page they say they take AMEX. I attempted a test order and on the payment page they do not show AMEX. Only VISA, MC and Discover.

So there you go.

jiggs

since it is so close to the end of the year, I can buy now and next year too...so I could get 60,000 miles in 4 months..? Hmmm, although you must keep the bonds for 6 months I don't consider this a bad investment...I'm not sure I can earn a tickets worth of intrest in 6 months at the way other investments are going these days...I'll look at getting a bunch in december then cashing them in 6 months later then buying more...I am starting to see a cycle here

NYC1

If you sell an I-Bond within 5 years of its purchase you forfeit 3 months' interest.

phoenixitc

I bonds are currently earning 5.92%, not bad compared to CDs or MMAs. The rate will change Nov 1 as they change every 6 months.

You can buy them for kids for college and earn points.

dgordon

As I noted elsewhere, AMEX is now accepted, and even though there is no AMEX logo, just don't check the other logos and put in your AMEX number it will be accepted. The $30,000 limit is per SS#. So you can buy jointly, using $30,000 for one name, then $30,000 for the other. Can do this with spouses, and children, including minor children. The other "limit" to consider is the 60,000 mile limit on a classic MC from Citibank, 100,000 limit on the gold card - but this is eliminated if you are elite status with American. The AMEX starpoints has no limit. I've already bought most of my bonds for this year. - too bad. But's it's almost 2002.
Lifetime platinum, here I come.

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DtG

belle3388

@@ did you find out if this was true, nostress? hmmm... if i purchased $30,000 by using Delta Amex, i would get 60,000 miles?
not a bad deal at all!

highgamma

I've been buying Series I savings bonds with my Visa and Mastercard for a while now. If you purchase them with Discover, I have been told that you do not get the cash back. (That is unverified info.) I've gotten miles from these purchases with no problems.

These are Series I bonds, so they have a fixed rate (currently 3%) and an inflation rate (effectively currently 2.92%). The rates are combined to give you the 5.92% rate. These rates are based upon a 6-month lag and are set twice per year in May and November. Therefore, the currently rates are based upon Nov 2000 - Apr 2000.

When you purchase a bond, the fixed rate is set for the life of the bond (up to 30 years). The inflation rate varies as inflation moves around. Why is this important? The current fixed rate of 3% will almost certainly go down next month when it is reset; therefore, it is in your best interest to buy these bonds this month rather than next month if you have the money available. This allows you to lock in the 3% rate.

What if the fixed rate rises a few years down the road? You can always redeem the bonds after 6 months and forego the 3 months interest to lock in the new higher rate. If 5 years have passed, there is no penalty.

This option on future interest rates is one of the most valuable features of the bond.

Sorry for the lengthy post. I sort of do this stuff for a living. Note that few financial planners will ever steer you towards savings bonds since they can't earn a commission. (Some of the better ones will, though.)

anz5708

I purchased 1 bond today, process went smoothly, tried to buy a 2nd and after I clicked "checkout" then "continue" I waited for several minutes and finally got something like "server cannot be found" never did get to the pay screen. Tried for a 3rd purchase and that went smoothly. Must have been a quirk in the system that 2nd time.
Great way to earn better interest rate than MMA or CD on some idle money PLUS top off my AMEX Starpoint account! Thanks for reminding me that I have been needing/wanting to do this for several months.

fallinasleep

thanks for the post highgamma...

I was about to do some research on this, but maybe you have the quick answer. I understand that the interest on these bonds is paid out when the bonds are redeemed. Is the federal tax on the accrued interest paid annually, or does one pay the tax on the lump sum interest in the year that the bonds are redeemed. Thanks.

dgordon

Someone mentioned elsewhere that the Delta promotion doesn't kick in until 10/15. I do not have a Delta skymiles cards, but I am passing on what I read elsewhere.

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DtG

flymetothemoon

Thanks dgordon and nsx for the info and heads-up!

Sounds like a good way to park some money for a little while at reasonable rates and get Starpoints.