Tax refund: Check, deposit or bond?
Most people expecting a refund from the IRS like to get that money as soon as possible.
But this year, the government is asking you to consider waiting a while to cash in.
In addition to your choices of direct deposit or a check in the mail, this year- instead of getting actually money back- you have the option of making a little extra money by getting your refund in the form of a U.S. savings bond.
It's called an Inflation Indexed Savings Bond, also known as a Series I Bond.
The bonds gain interest and are government guaranteed, but there's a catch.
Series I savings bonds take five years to mature with interest. You can't touch the money for the first year. There's a penalty if you redeem before the five years are up. And the interest rate is low.
"The Inflation Indexed Saving Bond, or I-bond, as it's called, only pays point 3 percent above the rate of inflation," said Greg McBride of Bankrate.com. "So what that means is, as long as you hold that bond, you're only going to outpace inflation by three tenths of a percentage point."
But at a current rate of about 3.36 percent, the I-Series Bond will earn you more than many better than most Certificates of Deposit. And since you don't pay federal tax on the interest until the bond is redeemed, it can be a great way to build your savings as long as you don't need the money right away.
The refund Series I Bonds only come in $50 denominations, so you'll get a check or direct deposit for what's left.
For more information:
Save for the Future
But this year, the government is asking you to consider waiting a while to cash in.
In addition to your choices of direct deposit or a check in the mail, this year- instead of getting actually money back- you have the option of making a little extra money by getting your refund in the form of a U.S. savings bond.
It's called an Inflation Indexed Savings Bond, also known as a Series I Bond.
The bonds gain interest and are government guaranteed, but there's a catch.
Series I savings bonds take five years to mature with interest. You can't touch the money for the first year. There's a penalty if you redeem before the five years are up. And the interest rate is low.
"The Inflation Indexed Saving Bond, or I-bond, as it's called, only pays point 3 percent above the rate of inflation," said Greg McBride of Bankrate.com. "So what that means is, as long as you hold that bond, you're only going to outpace inflation by three tenths of a percentage point."
But at a current rate of about 3.36 percent, the I-Series Bond will earn you more than many better than most Certificates of Deposit. And since you don't pay federal tax on the interest until the bond is redeemed, it can be a great way to build your savings as long as you don't need the money right away.
The refund Series I Bonds only come in $50 denominations, so you'll get a check or direct deposit for what's left.
For more information:
Save for the Future