Wichita Bail Bonds Blog

If you want to buy a $5,000 Series I Savings Bond, commonly referred to as an I Bond, you will pay exactly $5,000 for it. I Bonds are sold at face value, meaning the price you pay is the same as the amount printed on the bond. There are no hidden fees or markups. This makes I Bonds a straightforward and accessible investment, especially for people looking to preserve purchasing power over time.

Understanding I Bond Purchase Rules

Series I Bonds are issued by the U.S. Department of the Treasury and are designed to protect against inflation. They earn interest through a combination of a fixed rate and a variable inflation rate that is updated twice a year. When you buy a $5,000 I Bond, you are locking in that value and allowing it to grow over time based on these rates.

• Sold at face value – A $5,000 I Bond costs $5,000, with no premiums or discounts.
• Purchase method – You can buy I Bonds electronically through TreasuryDirect.gov for $25 or more, up to $10,000 per calendar year per person.
• Interest structure – I Bonds earn interest monthly and compound semi-annually. The composite rate changes every six months based on inflation.

Limits & Restrictions

There are annual purchase limits that apply. For most individuals, the maximum you can buy electronically each year is $10,000. You can also buy up to $5,000 in paper I Bonds using your federal tax refund. There is a minimum holding period of one year, and if you cash the bond before five years, you will forfeit the last three months of interest.

• Annual limit – $10,000 per person electronically, plus $5,000 in paper bonds via tax refund.
• Minimum holding – Must be held at least 12 months before cashing out.
• Early redemption penalty – Lose the last 3 months of interest if redeemed before 5 years.

How Interest Works

The return on your $5,000 I Bond investment is determined by the composite rate, which combines a fixed interest rate (currently set by the U.S. Treasury) and a variable inflation-adjusted rate. The inflation component makes I Bonds especially attractive during periods of rising prices, helping to preserve the real value of your money.

Interest is added to the bond monthly and compounded every six months. You won’t receive interest payments directly; instead, your bond’s value increases over time and is paid out when you redeem it.

A $5,000 I Bond costs exactly $5,000 to purchase. It offers a safe, government-backed investment that protects against inflation and earns interest over time. While you’ll need to hold it for at least one year and may face a small penalty for early redemption, I Bonds are a low-risk way to grow your money, especially when inflation is high. They are suitable for long-term savers, conservative investors, and anyone looking for a secure way to diversify their savings.