Best place to purchase I-Bonds

[modhatter]

As this will be my first time doing so, can anyone tell me the best place to purchase I-Bonds? (least expense) I know you can apparantly buy them at the bank, directly from Fed. How does that work - buying them directly? Is it cheaper than going to bank?

Also, how stiff is the penalty for cashing them prior to the five year period?

[SteveR]

Redemption Information
Minimum term of ownership: 1 year
Interest-earning period: 30 years
Early redemption penalties:
Before 5 years, forfeit 3 most recent months'interest
After 5 years, no penalty

Buy them from Treasury Direct and keep them as electronic bonds.
http://www.treasurydirect.gov/

[burch64]

There is no charge for I Bonds at the bank, fill out a short order form, give the teller the money and you receive a paper bond in the mail in about 10 days.

I like Treasury Direct, do a Google search, set up an account, put in your checking account number and buy I bonds online, you do not receive the bonds it is all in book form (electronic) but you can buy and redeem this way. You can also buy T-Bills (6 month) in your Treasury Direct account.

[modhatter]

Thank you both for that information.