I bought I Bonds. How can I see the interest for penalty months?

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Q. I bought a $10,000 I Bond in May 2022. I went on to Treasury Direct and saw my balance was only $10,236. I had expected $10,481 — $481 interest at 9.62% for six months. Does Treasury Direct have a statement where I can see tables showing the “penalty month?” Other than the balance, I can’t find any kind of statement for my account anywhere on the site. Also, does interest accrue on the “penalty months?”
— Investor

A. I Bonds have been very popular in the wake of inflation.

As you noted, they were paying 9.62% interest, and when the interest rate reset, that moved to 6.89% — still pretty good.

Treasury Direct doesn’t have a table that shows the penalty months, said Jim McCarthy, a certified financial planner with Directional Wealth Management in Rockaway.

Instead, it only shows the amount of interest you are eligible to redeem, he said.

“In other words, the available balance already has the three-month penalty calculated,” he said.

Take a look at this table. It shows that although the bond was held for seven months, the website will only show the amount that is available to redeem ($237) as it took into account the three-month interest penalty, McCarthy said.

“Interest accrues monthly on the principal value, so after the six months, the interest available will be added to the initial principal value of $10,000,” he said. “In November, when your I Bond interest reset, the new principal value will be of $10,236, so interest doesn’t accrue on the penalty months.”

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This story was originally published on Dec. 14, 2022.

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