giantmet said:I just got approved for a 4 year home equity loan at 4.1% and $0 closing costs. Going to buy some I bonds where I will keep for at least 15 months so I be assured of 5% APY at that point, then I'll see what the rates are and either cash in with the penalty, or keep it in there. It looks like I should be making at least 1% on this.

The 4.1% is at Randolfs Brooks Federal Credit Union

Intresting idea-- I might jump on it if I can find a bank in the northeast with no closing cost.

So as best I can tell, it seems that roughly half of the people in this thread are predicting the fixed rate goes up or stays the same as of Nov 1, and half are predicting it drops. That seems about right

wrong!

it seems that roughly half of the people in this thread are predicting the fixed rate goes up or stays the same as of Nov 1, and half are predicting it drops. That seems about wrong.

Half will be wrong.

dewolfx said:So as best I can tell, it seems that roughly half of the people in this thread are predicting the fixed rate goes up or stays the same as of Nov 1, and half are predicting it drops. That seems about right

Looking to find someplace other than TreasuryDirect.gov to buy i-bonds, I'm told that my bank (USAA) and my local CU do not sell U.S. Savings Bonds. Guess I shall have to find a bank that does. Wonder why this is not easier, as the i-bonds at 4.80% look like a good investment to me. Good for you, for holding your own opinion in the face of a banker's snooty response! pachelbel9 said: I went to my bank (Bank One/Chase) today to buy some I-bonds. They told me that today was considered the date of purchase, so does it really matter how long it takes to process the request? Also, the relationship banker gave me a "you're an idiot for buying bonds" look when I told him what I was doing. When I explained why I was doing it, he just said "Well, that's interesting" in an incredibly condescending manner. Oh well. I'm not particularly interested in his opinion anyway.

Delete.

Sorry for the long post, but I think that it may not be worth breaking CDs for this... say you have 10k in a recent 5yr 4.5% CD. 3 month penalty is approx $100.00

CD:
33% fed tax bracket, 3.07 state. (fed deduct makes state=2.0569)
4.5% * (1.0 - .33 - .020569) = 2.9224395 annual yield * (14/12) = 3.4095%
after 14 months, compounded monthly, I come up with 10346.40

I-Bond:
now if you break the CD for an Ibond this month
1st 6 months 4.8% / 12 months = 0.004% per month
2nd 6 months 6.89%/ 12 months = 0.0057416666% per month
start with 10,000.00 first 6 months earn 40.00 per month
new balance 10,240.00 next 6 months earn 58.79 per month
new balance 10,592.74 next 3 months 0% 0.00 per month due to penalty
tax day comes 4/15/08: 592.74 * .67 left after tax = 397.14 real interest
new balance after paying taxes: 10,397.13

In this example I end up with under $50 extra with the Ibonds, and that's without including the penalty from breaking the CD in the first place. After paying the $100 penalty, I lost $50 by buying the ibonds.

If you break a CD does the bank reduce the YTD interest on your 1099? If they don't it would really be bad to pay income tax on a dividend that the bank came back and charged you for.

Since nothing is a definite, it could be that the best CD rate around for a shorter term CD is less than 4.5% after the 1/1/07 I bond cash in date. Or they go way up and it's a good time to buy one then. Or of course it could prove to be worthwhile to keep the i bonds for 6 more months, then 6 more, until the 5 yr no penalty date comes around.

My example doesn't consider if you already had liquid cash without paying a fee. In that case, OP's example does yield just over 5.85% total after 14 months or 5% APY, even figuring in the last 3 months of 0.00 interest. and sadly that may beat many stocks or mutual funds in the short term.

I still have'nt completed my authorization form yet. I think you can purchase bonds without it , but need it to redeem them.

Dear xxxxx:

Thanks again for opening a TreasuryDirect account. Your new account number is V-xxx-xxx-xxx. You'll use this number plus your password to access your account.

https://www.treasurydirect.gov/RS/BPDLogin?application=rs

We are having difficulty verifying the information you provided when opening your account. For your protection, please complete the Account Authorization form https://www.treasurydirect.gov/pdf/rs/acctauth.pdf and mail it to TreasuryDirect, P.O. Box 7015, Parkersburg, WV 26106-7015. You'll still be able to access and manage your account, but a hold has been placed on your account that will prevent you from completing certain transactions (i.e.: redemptions) at this time. After we receive and approve the Account Authorization form, the hold on your account will be removed and you'll be able to enjoy all the features of your TreasuryDirect account. This usually takes 3 to 6 business days after receipt of the form. You can check the Account Info section of your account to verify the hold is removed.

Bankrate Article on iBonds

heythere said:Bankrate Article on iBonds
Nice to see here at FWF we're a week ahead of the game . The author thinks the high inflation numbers will lead the Treasury Dept to cut the fixed rate come November, and recommends buying sooner rather than later. I'm not sure about his reasoning, but I'm buying sooner anyway.