Safe to buy I-Bonds on January 31st?

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Safe to buy I-Bonds on January 31st?

Postby Gill » Thu Jan 24, 2013 9:22 pm

I'm sure I've seen it discussed here, but is it safe to order an I-Bond on Treasury Direct on the last day of the month, or possibly the evening before, and still have the bond dated in that month?
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Re: Safe to buy I-Bonds on January 31st?

Postby Rainier » Thu Jan 24, 2013 9:28 pm

I've done it at 10pm eastern the night before and got it the next day. But it wasn't the last day of the month so I had no risk.
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Re: Safe to buy I-Bonds on January 31st?

Postby Mel Lindauer » Thu Jan 24, 2013 9:31 pm

MBMiner wrote:I'm sure I've seen it discussed here, but is it safe to order an I-Bond on Treasury Direct on the last day of the month, or possibly the evening before, and still have the bond dated in that month?
Bruce


Not sure about TD, since I don't use it, but with paper I Bonds, you could buy them on the last BUSINESS day of the month, not the last day of the month, even if your bank was open on the weekend. I would suspect that the same holds true for TD.
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Re: Safe to buy I-Bonds on January 31st?

Postby tfb » Thu Jan 24, 2013 9:59 pm

Not safe. Why push it?
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Re: Safe to buy I-Bonds on January 31st?

Postby Gill » Thu Jan 24, 2013 10:07 pm

tfb wrote:Not safe. Why push it?

Funds aren't available until the 31st. :(
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Re: Safe to buy I-Bonds on January 31st?

Postby Gill » Thu Jan 24, 2013 10:12 pm

Mel Lindauer wrote:
MBMiner wrote:I'm sure I've seen it discussed here, but is it safe to order an I-Bond on Treasury Direct on the last day of the month, or possibly the evening before, and still have the bond dated in that month?
Bruce


Not sure about TD, since I don't use it, but with paper I Bonds, you could buy them on the last BUSINESS day of the month, not the last day of the month, even if your bank was open on the weekend. I would suspect that the same holds true for TD.

Yes, Mel, I knew that was the case with the paper bonds. I assume the same principle would apply with Treasury Direct. In any case it's not a serious risk with very little money involved. I'll try it and let you know how it works out.
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Re: Safe to buy I-Bonds on January 31st?

Postby HueyLD » Thu Jan 24, 2013 10:20 pm

How early on 1/31 will the fund be available?

I have used TD to purchase I bonds almost every year and the debits always hit my bank account the business day after I initiated the purchase on TD. I always checked the online activities for the linked bank account on the expected debit day and the debits seemed to arrive in late mornings.

So, if your money will be available first thing in the morning on 1/31, it should be safe to initiate the purchase on 1/30.
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Re: Safe to buy I-Bonds on January 31st?

Postby crowd79 » Thu Jan 24, 2013 10:20 pm

You have to purchase your bonds on the 2nd to last business day of the month in order for it to be issued for that month (& thus get the month's interest payment) just to be safe.

Scroll down and read the red text subtitle "How Late in the Month Can You Purchase an I Bond?" in the following link:

http://www.depositaccounts.com/blog/2011/05/treasury-announces-new-series-i-savings-bond-rate-of-460.html
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Re: Safe to buy I-Bonds on January 31st?

Postby Gill » Thu Jan 24, 2013 10:50 pm

crowd79 wrote:You have to purchase your bonds on the 2nd to last business day of the month in order for it to be issued for that month (& thus get the month's interest payment) just to be safe.

Scroll down and read the red text subtitle "How Late in the Month Can You Purchase an I Bond?" in the following link:

http://www.depositaccounts.com/blog/2011/05/treasury-announces-new-series-i-savings-bond-rate-of-460.html

The link you included is not Treasury policy necessarily and seems to represent one person's experience. I guess the other part of my question should have been the delay in charging the checking account and that seems to be the next day. It would seem it all adds up to be that I can purchase on the 30th and be safe. In any event, as I mentioned to Mel, there is not a great deal of money involved at $10,000 and also no risk of an overdraft because of a linked HELOC. Looks like I'll buy on the 30th.
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Re: Safe to buy I-Bonds on January 31st?

Postby FoolStreet » Fri Jan 25, 2013 12:23 am

MBMiner wrote:
crowd79 wrote:You have to purchase your bonds on the 2nd to last business day of the month in order for it to be issued for that month (& thus get the month's interest payment) just to be safe.

Scroll down and read the red text subtitle "How Late in the Month Can You Purchase an I Bond?" in the following link:

http://www.depositaccounts.com/blog/2011/05/treasury-announces-new-series-i-savings-bond-rate-of-460.html

The link you included is not Treasury policy necessarily and seems to represent one person's experience. I guess the other part of my question should have been the delay in charging the checking account and that seems to be the next day. It would seem it all adds up to be that I can purchase on the 30th and be safe. In any event, as I mentioned to Mel, there is not a great deal of money involved at $10,000 and also no risk of an overdraft because of a linked HELOC. Looks like I'll buy on the 30th.
Bruce



I was hoping to buy a small quantity ($1K) at the end of Jan, too. There are a couple thoughts:

1. Place the order online on 1/30. Hopefully, the funding account is withdrawn on the 31st, and the TD account is credited on 1/31.

2. Place the order online on 1/25, but scheduled to occur on 1/31. I wonder when the debit and credits will occur. This would be ideal because it would allow me to budget my paycheck and schedule the transaction.

3. Buying from a separate account, eg, ING, requires an extra amount of paperwork to authorize. That's a pain. I'd love to be able to choose whether to pull money form the checking or HY Savings(ING) account without a lot of rigamorole.
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Re: Safe to buy I-Bonds on January 31st?

Postby zaboomafoozarg » Fri Jan 25, 2013 1:01 am

How much of a difference will it make, really?
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Re: Safe to buy I-Bonds on January 31st?

Postby Mel Lindauer » Fri Jan 25, 2013 1:05 am

zaboomafoozarg wrote:How much of a difference will it make, really?


I agree. At today's current bank interest rates, I don't think it's worth gambling with leaving the money in the bank for an extra day or two, especially given that you're gambling with a full month's interest on the I Bonds you'd get for just owning them for a day or two. Why push the envelope?
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Re: Safe to buy I-Bonds on January 31st?

Postby FoolStreet » Fri Jan 25, 2013 1:47 am

Mel Lindauer wrote:
zaboomafoozarg wrote:How much of a difference will it make, really?


I agree. At today's current bank interest rates, I don't think it's worth gambling with leaving the money in the bank for an extra day or two, especially given that you're gambling with a full month's interest on the I Bonds you'd get for just owning them for a day or two. Why push the envelope?


It's like driving 1/2 mile down the road to buy your gas at Costco. Does it really matter? Probably not.

For i-bonds with the early withdrawal penalty, that one month "feels" important. Getting paid on the 31st and buying on the 31st would be super nice. Otherwise, you get paid on the 31st, and buy on the 1st and lose the entire month. Is it material? nah But, still...
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Re: Safe to buy I-Bonds on January 31st?

Postby Flobes » Fri Jan 25, 2013 2:25 am

I purchased my $10k this morning, 1/24.

(It is already tomorrow at Treasury Direct, but it is still tonight for me.)

I went online to see my status for you.

Funds have already been pulled from my bank account, 1/24.

On Treasury Direct, status shows as "Purchase Requested 1/24"

In History tab of TD, all my transactions show as:
Day 1 Purchase Requested
Day 2 Security Issued.

So I think the answer to your question is that funds are pulled one day, and the bond is issued the next day. If you pull the funds Jan 31, the bond will be issued Feb 1.
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Re: Safe to buy I-Bonds on January 31st?

Postby FoolStreet » Fri Jan 25, 2013 3:04 am

Flobes wrote:I purchased my $10k this morning, 1/24.

(It is already tomorrow at Treasury Direct, but it is still tonight for me.)

I went online to see my status for you.

Funds have already been pulled from my bank account, 1/24.

On Treasury Direct, status shows as "Purchase Requested 1/24"

In History tab of TD, all my transactions show as:
Day 1 Purchase Requested
Day 2 Security Issued.

So I think the answer to your question is that funds are pulled one day, and the bond is issued the next day. If you pull the funds Jan 31, the bond will be issued Feb 1.


In this example, are your i-bonds showing as crediting on 1/24 or 1/25 or 1/26?
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Re: Safe to buy I-Bonds on January 31st?

Postby Flobes » Fri Jan 25, 2013 3:17 am

FoolStreet wrote:
Flobes wrote:I purchased my $10k this morning, 1/24.

(It is already tomorrow at Treasury Direct, but it is still tonight for me.)

I went online to see my status for you.

Funds have already been pulled from my bank account, 1/24.

On Treasury Direct, status shows as "Purchase Requested 1/24"

In History tab of TD, all my transactions show as:
Day 1 Purchase Requested
Day 2 Security Issued.

So I think the answer to your question is that funds are pulled one day, and the bond is issued the next day. If you pull the funds Jan 31, the bond will be issued Feb 1.


In this example, are your i-bonds showing as crediting on 1/24 or 1/25 or 1/26?


Too soon to tell. The Ibonds are "Purchase Requested" at Treasury Direct, and the money's already been pulled from the bank. I'll check status again in the morning.
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Re: Safe to buy I-Bonds on January 31st?

Postby DualIncomeNoDebt » Fri Jan 25, 2013 4:13 am

What kind of rate can you currently earn on iBonds, especially if you are in max federal and state tax bracket? I've never considered buying them before, but I am now based on this post and some others I've read.
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Re: Safe to buy I-Bonds on January 31st?

Postby camaro327 » Fri Jan 25, 2013 6:53 am

Why wait even to the last 1 or 2 days. If you have $10,000 in a good savings it's only earning about 100/365 = 27 cents per day.

My piece of mind having it done a few days early is worth more than that.
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Re: Safe to buy I-Bonds on January 31st?

Postby dickenjb » Fri Jan 25, 2013 8:32 am

camaro327 wrote:Why wait even to the last 1 or 2 days. If you have $10,000 in a good savings it's only earning about 100/365 = 27 cents per day.

My piece of mind having it done a few days early is worth more than that.


Amen to that. I scheduled my purchase of 2x$10K for Monday the 28th. Why risk a month of 1.76% for a few days of 0.25% (what I earn on checking).
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Re: Safe to buy I-Bonds on January 31st?

Postby sscritic » Fri Jan 25, 2013 8:35 am

camaro327 wrote:Why wait even to the last 1 or 2 days.

Because you won't have the money until the 31st. That's what the OP said was the situation. That's the topic of the thread. The title is "Safe to buy I-Bonds on January 31st?"

Maybe you could run an experiment for us since you have the money sitting around. Place a $500 order on 1/29, a $500 order on 1/30, and a $500 order on 1/31. If that's more than you can handle at this time, make them $50 each. Report back February 4.

I actually have the solution, based on another thread. Take a 2 day loan from your 401(k). :)
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Re: Safe to buy I-Bonds on January 31st?

Postby surfer1 » Fri Jan 25, 2013 11:30 am

I just realized I'm in the same boat. Wrong account linked in TD, so I have to move some stuff around. It's too much of a pain to add a new bank account in TD, as they require a mailed in and certified form.

In the grand scheme of things, buying on 1/31/2013 or 2/1/2013 and delaying the first month's interest ($15), doesn't matter all that much. True, you don't get to earn double interest from having the money sit in a bank account earning 0.10% and double it by transferring it to an ibond rate at the end of the month. Maybe a $10 loss?
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Re: Safe to buy I-Bonds on January 31st?

Postby FinancialDave » Fri Jan 25, 2013 11:41 am

Do you have a linked on-line savings to your checking -- why not transfer some money from your emergency fund for 2 days, if you are that concerned and want to get a Jan issue. Then just transfer it back when the funds come in.

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Re: Safe to buy I-Bonds on January 31st?

Postby hollowcave2 » Fri Jan 25, 2013 11:56 am

With TD, the bonds are not issued until the next business day after purchase, so if you placed an order on TD for savings bonds on January 31st, you will get a February issue bond. You need to place it on January 30 to get a January bond.
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Re: Safe to buy I-Bonds on January 31st?

Postby Flobes » Fri Jan 25, 2013 2:14 pm

My IBond process is now accomplished for 2013:
** Request at Treasury Direct 1/24 afternoon, TD time.
** Funds pulled from my bank account 1/24 (per bank's website).
** Bonds issued 1/25, next day, per Treasury Direct.
Day One: request, bank pull. Day Two: bonds issued.

So based on my current experience:
** To OP Bruce (MBMiner), if you cannot make funds available until Jan 31, you will get a February 1 bond date.
** To Foolstreet, do not count on bank pull the day following your TD request.
** To HueyLD, my process played different than yours: my bank pull was definitely same day.
** To Hollowcave2, my experience confirms your concise explanation.

My cash was available bcz I set up a CD ladder with January maturities to annually pop the $10k (as well as my Jan 15 estimated tax with extra $5k for IBonds, mailed 1/15 and cleared the bank 1/23). And cents of lost interest does not make my list of things that make sense to care about.

I bought mine "early" to avoid any potential problems, and I will not be participating in next week's thread "Can't log into Treasury Direct."
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Re: Safe to buy I-Bonds on January 31st?

Postby Mel Lindauer » Fri Jan 25, 2013 2:24 pm

surfer1 wrote:I just realized I'm in the same boat. Wrong account linked in TD, so I have to move some stuff around. It's too much of a pain to add a new bank account in TD, as they require a mailed in and certified form.

In the grand scheme of things, buying on 1/31/2013 or 2/1/2013 and delaying the first month's interest ($15), doesn't matter all that much. True, you don't get to earn double interest from having the money sit in a bank account earning 0.10% and double it by transferring it to an ibond rate at the end of the month. Maybe a $10 loss?


That one day can mean a lot more than $10. Not only do you lose the one month's interest, but by being one day late it also adds one complete month to the time you can redeem the I Bonds (you must hold them for one year).
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Re: Safe to buy I-Bonds on January 31st?

Postby FoolStreet » Wed Jan 30, 2013 1:56 pm

Flobes wrote: To Foolstreet, do not count on bank pull the day following your TD request.


Here are the results of my tests:

On 1-29, I scheduled two purchases for 100 each, scheduled for purchase on 1-30 and 1-31, respectively. Today, I logged in and saw that the 1-30 purchase was registered in my TD account. I see no mention of the transaction in my brick and mortar bank, but that's not unusual because the brick and mortars are notoriously slow (and are not unhappy if one overdraws their account because they didn't see a completed transaction, but that's beside the point).

Therefore, I believe one can schedule a TD purchase ahead of time and it will credit the day scheduled. I have entered another, larger scheduled purchase today, for transaction tomorrow. Tomorrow, I will see if both of my scheduled 1-31 orders show up in TD on 1-31, which would effectively be 1-1.
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Re: Safe to buy I-Bonds on January 31st?

Postby crowd79 » Wed Jan 30, 2013 1:59 pm

You must buy Today if you want your I and/or EE Bonds to have a January issue date.
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Re: Safe to buy I-Bonds on January 31st?

Postby FoolStreet » Wed Jan 30, 2013 5:28 pm

crowd79 wrote:You must buy Today if you want your I and/or EE Bonds to have a January issue date.


I'll let you know what happens tomorrow! Fingers crossed.....
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Re: Safe to buy I-Bonds on January 31st?

Postby jpsfranks » Wed Jan 30, 2013 6:22 pm

FoolStreet wrote:Therefore, I believe one can schedule a TD purchase ahead of time and it will credit the day scheduled.

I had a similar experience. I scheduled a purchase earlier this month for the 29th. My bank was debited and the bonds were purchased on the 29th. In theory then I think if you really want to earn an extra $0.50 or so of interest on your $10k you could schedule a purchase ahead of time for the last business day of the month.
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Re: Safe to buy I-Bonds on January 31st?

Postby Mel Lindauer » Wed Jan 30, 2013 6:31 pm

DualIncomeNoDebt wrote:What kind of rate can you currently earn on iBonds, especially if you are in max federal and state tax bracket? I've never considered buying them before, but I am now based on this post and some others I've read.


The current composite rate is 1.76%. You'll earn that rate for the first six months and then on May 1st, the next inflation adjustment number is announced and that's the rate you'll get for the second six months.

Several advantages for those in high federal and state tax brackets:
1. I Bonds are tax-deferred for up to 30 years, so you should be able to redeem them when you're retired and in a lower tax bracket.
2. Another important feature is that they're free from from state and local taxation, so that will add to your after-tax earnings on the I Bonds.
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Re: Safe to buy I-Bonds on January 31st?

Postby Dario33 » Wed Jan 30, 2013 6:42 pm

Just placed my I-Bond order a few mins ago. Hopefully it made it in under the bell. :happy
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Re: Safe to buy I-Bonds on January 31st?

Postby papito23 » Wed Jan 30, 2013 7:18 pm

Warning: chance of snark ahead...

Sound quite risky. If you miss out on an entire month's worth of interest, that's currently... 1.76%, divided by 12... a 0.15% return on your investment. So for each $1K in bonds, minus some 25% for taxes ... we're talking $1.13. Yes, a dollar and thirteen cents! Nearly 4 pennies per day per $1K that you've missed! Can you afford to miss that? (In all seriousness, No worries mon! I'm surprised this even gets mentioned in the I-Bonds wiki...)
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Re: Safe to buy I-Bonds on January 31st?

Postby FoolStreet » Wed Jan 30, 2013 7:36 pm

papito23 wrote:Warning: chance of snark ahead...

Sound quite risky. If you miss out on an entire month's worth of interest, that's currently... 1.76%, divided by 12... a 0.15% return on your investment. So for each $1K in bonds, minus some 25% for taxes ... we're talking $1.13. Yes, a dollar and thirteen cents! Nearly 4 pennies per day per $1K that you've missed! Can you afford to miss that? (In all seriousness, No worries mon! I'm surprised this even gets mentioned in the I-Bonds wiki...)


I totally get it. In all seriousness, there are two issues:

1. I get paid on the 31st. The money is not available on the 30th. So if I can't make the purchase on the 31st, for an effective Jan 1 start date, then my purchase is Feb 1st. Then, we lose a month's worth of interest and a month's worth of "seasoning."

2. The ability to send money to TD from a 2nd account, like a HY account, is complicated by needing to send in a custom form with medallion guarantee. Or, if, for example, I had some cash in ING on the 30th, it would be non-elegant to transfer from ING to brick and mortar to TD by the 30th. Then after getting paid on the 31st, transfer from brick and mortar the equivalent amount back to ING.
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Re: Safe to buy I-Bonds on January 31st?

Postby Savvy » Wed Jan 30, 2013 8:20 pm

Something to consider is that instead of having the money locked up for 11 months and a day, it will be locked up for nearly 12 months if bought at the beginning of February. Right?
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Re: Safe to buy I-Bonds on January 31st?

Postby Jebediah » Thu Jan 31, 2013 2:55 am

Put in my 10k ibond order tonight. Whether it counts as Jan or Feb I couldn't care less. We're talking about 20 or so bucks.
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Re: Safe to buy I-Bonds on January 31st?

Postby hollowcave2 » Thu Jan 31, 2013 11:58 am

Savings bonds bought at TD are issued the next business day after purchase. I-bonds purchased on Jan 31 will be issued on Feb 1 and have a February date.
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Re: Safe to buy I-Bonds on January 31st?

Postby mslaw » Thu Jan 31, 2013 12:04 pm

Interesting posts FoolStreet on the mechanics of TD U.S. Savings Bond purchases. Looking forward to answer today.
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Re: Safe to buy I-Bonds on January 31st?

Postby FoolStreet » Thu Jan 31, 2013 12:27 pm

mslaw wrote:Interesting posts FoolStreet on the mechanics of TD U.S. Savings Bond purchases. Looking forward to answer today.




It worked! Both my scheduled transactions went through this morning and show effective as of Jan 1st.


I think the key is that you have to pre-schedule the purchase to occur on the last day.

I am afraid there are some folks reading this thread who don't realize you can pre-schedule orders and that is where the confusion lies.

Let me know if any other questions.
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Re: Safe to buy I-Bonds on January 31st?

Postby Dario33 » Thu Jan 31, 2013 12:33 pm

FoolStreet wrote:
mslaw wrote:Interesting posts FoolStreet on the mechanics of TD U.S. Savings Bond purchases. Looking forward to answer today.




It worked! Both my scheduled transactions went through this morning and show effective as of Jan 1st.


I think the key is that you have to pre-schedule the purchase to occur on the last day.

I am afraid there are some folks reading this thread who don't realize you can pre-schedule orders and that is where the confusion lies.

Let me know if any other questions.

Looks like you're right. My Wednesday purchase also reflects 1/1/13. Glad to have figured this out. :)
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Re: Safe to buy I-Bonds on January 31st?

Postby hollowcave2 » Thu Jan 31, 2013 1:39 pm

I think the key is that you have to pre-schedule the purchase to occur on the last day.

I am afraid there are some folks reading this thread who don't realize you can pre-schedule orders and that is where the confusion lies.


This is good to know. It seems like as long as TD can plan ahead for the purchase, then you can get it the last day. That's a good work around.
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Re: Safe to buy I-Bonds on January 31st?

Postby dratkinson » Fri Mar 01, 2013 9:25 pm

Testing this topic.

In early Feb, scheduled a 28 Feb (last business day of the month) I bond purchase. Checked today (1 Mar) and noticed the bonds were issued with a 1 Feb issue date. I recall a notice during the scheduling process that said that if the scheduled purchase was on a non-business day, then it would be delayed until the next business day.

So it appears that as long as a "scheduled purchase" is on the last business day of the month, then it works as planned to get us a first-of-the-month issue date. And it was nice not needing to remember to go online to make a purchase on the last day of the month.
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