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Originally Posted by jmjj215
What happens if you pull it out prior to the requisite one-year holding period?
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Don't think early withdrawals are possible. You have to wait that one year.
That's one advantage bank CDs have over savings bonds. At least with a CD, you can usually take the penalty and do a withdrawal.
About the 7%, it's important to note that you'll get this rate only for the six months. It changes based on inflation (although there is a fixed component). A few years ago there was a period in which I bonds were paying under 3%. In the long term, it averages out.
Also, if you redeem the bond before 5 years, you lose 3 months of interest. But even factoring this 3-months penalty, a 12 to 15 month term with the savings bond bought this month will have some nice returns.