(Repost) When To Sell Off Our I-Bonds

We covered extensively the saga of excellent returns on I Bonds during 2021 and 2022. The most recent rate is 3.40%, which is lower than most high-yield savings accounts are offering. Many of us are contemplating when to pull out our funds from Treasury Direct.

First let’s review the I Bond rates that many of us bought into:

Now let’s take a look at when to pull out your funds. For the sake of this post, the assumption is that we want to keep the money in I Bonds for the 6.48% rate, but not when it moves onto the 3.40% rate. (We’re also assuming the I Bonds were purchased prior to November 2022.)

To find the date of your I Bonds purchase, login to the Treasury Direct website and it’ll show the Issue Date. Or it might be easier to check your bank transactions to see when the funds were pulled. You can also search your email for: “treasury.direct@fiscal.treasury.gov new purchase” (without the quotes).

  • If you bought in April or October (that’s when the new rates were publicized on blogs, that’s BEFORE the new rates went live) – regardless of which year you bought – you’ll want to wait until January 1, 2024 to withdraw the I Bonds. That’s because your 6 months of 6.48% interest finishes in September 2023, then your 3-month penalty period takes up October, November, December.
  • If you bought in May or November (that’s the month when the new rates went live) – regardless of which year you bought – you’ll want to withdraw the I Bonds on August 1, 2023. That’s because your 6 months of 6.48% interest finished in April, then your 3-month penalty period takes up May, June, July.
  • If you bought in June or December – regardless of which year you bought – you’ll want to withdraw the I Bonds on September 1, 2023. That’s because your 6 months of 6.48% interest finished in May, then your 3-month penalty period takes up June, July, August.
  • If you bought in July or January – regardless of which year you bought – you’ll want to withdraw the I Bonds on October 1, 2023. That’s because your 6 months of 6.48% interest finished in June, then your 3-month penalty period takes up July, August, September.
  • If you bought in August or February – regardless of which year you bought – you’ll want to withdraw the I Bonds on November 1, 2023. That’s because your 6 months of 6.48% interest finished in July, then your 3-month penalty period takes up August, September, October.
  • If you bought in September or March – regardless of which year you bought – you’ll want to withdraw the I Bonds on December 1, 2023. That’s because your 6 months of 6.48% interest finished in August, then your 3-month penalty period takes up September, October, November.

Someone who bought 3 or 4 years ago might decide to hold until they hit the 5-year mark and thus avoid the 3-month penalty. Regardless, you’ll always want to withdraw near the beginning of the calendar month since interest gets paid out monthly. For example, if it’s now 20th of the month, I’d wait until the first of the coming month to cash out and get an extra full month worth of interest for holding those extra 10 days.

Some people might be playing the long game and plan on holding these long term. Personally I plan on cashing out in January 2024 since I always bought in April and October. For someone who has the .90% fixed rate it becomes a tougher decision whether to cash out or hold, depending on your long term investing goals.

A reader reminds us that you get hit with all the taxes in the year which you break the I Bond. Until then the interest just accrues in the background, and isn’t actually realized until you break the bond. (There are federal taxes on I Bonds income, and you’ll get a 1099-INT for the income. There are no state or local taxes on I Bonds.) And so if you plan on being in a lower tax bracket next year it might make sense to hold until January 1st.
    Chuck
  • On January 1, 2024, 00:15
Tags: bondshigh yield

View Comments (481)

  • Does anyone know where to find the info about which account is linked to my Treasury Direct account? Looks like the website itself is down right now

  • Sorry if am asking the same stupid question but it is late and this is making my head hurt.
    I bought $10k worth on Oct 27 2022. So looks like ideally I should have redeemed on Jan 1, but it is already past that, so I guess now I should wait till Feb 1st to redeem, right?

  • hey all,

    just checked and according to my account the Series I savings bond were issued on
    Issue Date:
    04-01-2022

    So according to this article im safe to withdraw now? I will just be surrendering the last 3 months of 3.38% due to penalties?

  • Since I bought in August and didn't sell out in November, wouldn't I still loose the last 3 months of interest at 3.38% (Oct, Nov, Dec) ?

    • Yes... the whole point of this post was to help people maximize potential returns by avoiding holding the bonds unnecessarily at the 3.38% rate. If you had redeemed them in Nov, you could have been earning 5%+ on that money in Nov and Dec instead. Its not too late to redeem for Jan, but don't wait any longer.

    • On http://eyebonds.info/ibonds/index.html click Apr of 2022, click your Ibond's face value $amount button along the bottom of the table to display a table of the bond's value each month since issue. Table value's don't reflect the 3-month early redemption penalty. 

      Assuming your April 2022 bond was $10K, if you redeem it in Jan 2024, your redemption value will be the 3 month's earlier, Oct 1 2023 table value of $11,208, losing the Jan 1 '24, Dec 1 '23 and Nov 1 '23 interest payments.

  • Just redeemed $11,208. Invested 10K in the last week of Apr 2022.

    I wouldn't have done this if I didn't see your informative i-Bonds posts, thanks Doc.

  • Maybe a dumb question on the interest on these. My 10k in bonds was issued March 1st 2022 and now its at 11,240.00. Shouldn't it be around 11,610.00 ? (9.62+6.48)
    edit: nevermind, that was a dumb question. 7.12%, 9.62%, and 6.48% for half a year each makes sense

  • Question for anyone who might have an idea. I'm withdrawing my I-Bonds as I want to use the money towards some projects ... not using it all at once, but I want to put it into an account where I can pay from that account each week as I need it.

    Does anyone know of an saving or checking bank accounts that I could withdraw the I-Bonds to, and get a bonus? Would the I-Bonds trigger as a direct deposit for those bonuses that require direct deposit?

    Hopefully I explained what I'm trying to do clearly ... ultimately, just trying to see if theres a bank account bonus I can use when I withdraw to make some extra money.

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