|   Dear
Dollar Diva,
Where can I get Series I bonds? -- Josephine
 Dear
Josephine,
Series I bonds are United States Treasury savings bonds,
backed by the U.S. government. You can buy them from:
- Banks
and credit unions.
- Payroll deductions, if your employer offers
them.
- The U.S. Department of Treasury's "TreasuryDirect"
Web site with an automatic debit from your checking and/or savings account.
When you buy your bonds from a financial institution,
the U.S. Postal Service will deliver them to you, via first-class
mail, within two weeks. When you purchase your bonds online through
TreasuryDirect, you will not
receive a paper bond. You will, however, be able to view, manage
and redeem your savings bonds online through a convenient TreasuryDirect
account.
If
the bond is a last-minute present, get a savings bond gift certificate to enclose
with your card, and have the bond sent directly to the lucky recipient's house.
Your bank carries the savings bond gift certificates, or you can access
and print one directly from the savings bond Web site all by yourself. Series
I bond interest
The Series I bond interest rate is a composite made
up of two parts: - Annual fixed rate: determined on
the day you buy the bond, it lasts for 30 years.
- Semiannual
inflation rate: determined on the day you buy the bond, it changes every six months.
Currently, the composite rate is 4.8 percent. The
annual fixed rate is 1.2 percent and the adjustable rate is 3.58
percent. (The slight discrepancy is due to the way the composite
is calculated.) The Series I bond semiannual inflation rate changes
every year in May and November, reflecting the change in the Consumer
Price Index for All Urban Consumers. If the index is up, the interest
rate will go up; if it's down, the interest rate will go down.
And
don't forget the tax benefits:
- State and local income tax: Series I bond interest
is exempt; mighty nice if you live in a high income tax state
such as California or New York.
- Federal income
tax: Series I bond interest accumulates and compounds tax-free for up to 30 years,
until you cash in the bonds. If you use the bond proceeds for college tuition
for yourself, your spouse or dependent, the interest may be totally tax-free.
DOROTHY ROSEN has a master's degree in finance,
with a specialization in accounting, from the Kellogg Graduate School
at Northwestern University in Evanston, Ill. Rosen has more than
15 years of experience in the financial arena, serving in Illinois
and Florida as a certified public accountant, financial consultant,
expert witness and educator. She is owner of Dorothy Rosen, CPA,
a public accounting firm that serves individuals and small businesses.
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