Thanks to Treasury Direct’s overly secure login sequence…

With a positive cash flow again, I seriously considered throwing some money at I-Bonds again, and with interest rates dropping like a rock, if I jumped the gun before the May 1st, when the fixed rates are adjusted semi-annually, I’d have surely been pulling in a better return than what ING currently offers.

On April 30, I decided to make a move. I logged into my TreasuryDirect account…

Or I tried to…

See, for a couple of years now, they’ve had this “virtual keyboard” login sequence. You have to click all over the place on a randomized keyboard to enter your password. It’s more of a pain than anything else. But a couple of months ago, they took it a step further and mailed everyone an Access Card.

I opened it, looked at it, and put it away. It looked like a Bingo Card. No joke, that’s it up on the right.

So now, in addition to the virtual keyboard, they make you play bingo. Again, with another randomized virtual keyboard.

Could they make logging in any more of a hassle? It’s overkill.

Needless to say, I didn’t have the super secret access card on me, so I couldn’t login. That evening, I thought, “Hey, maybe I can squeak in a last minute transaction before the rates change tomorrow…”

I logged in using my wacky bingo card, set-up a transfer for $1000, a click here, a click there… Things were going pretty smoothly — I didn’t even accidentally hit the “back” button (something you can’t do on their difficult to navigate website)

I was almost done, and feeling pretty good about this wise money move I was making. But then I read the fine print — my transaction wouldn’t go through until May 1st.

That was too late. I cancelled the transaction — and thank goodness for that!

On May 1st, the U.S. Treasury cut the fixed interest rate on I-Bonds all the way down to 0.00%. That’s not a typo. The rate is zero. Nil. Nada. Zip.

I’m sure glad I didn’t accidentally throw $1000 in that direction now — can you imagine being stuck with a 0.00% fixed rate? Now, I realize the real rate is 4.84%, but that’s just the inflation component that changes every six months. While that might sound attractive given that most online banks only offer something in the 3% range, it really isn’t, with the fixed rate at zero, you’re only keeping up with inflation — you’re not gaining anything. On top of it, you can’t get at the money for 12 months.

Not much of a deal there.

In the end, it makes me feel a little better about the little I still have invested in I-Bonds which are currently a rate of 6.27%.

Now *that* was a deal…

This afternoon, I redeemed some of the bonds I’d purchased from TreasuryDirect over the past couple of years — $853.55 worth to be exact.

According to Clark Howard, I jumped on the I-Bond and EE-Bond bandwagon much too late:

Series I-bonds come with two interest rates. The first is a fixed interest rate that stays the same for as long as you own your bond. The fixed rate is set when you buy your bond. The second is the floating rate, which is based on the inflation rate in the country. The government resets that rate each May and November.

Series I-bonds that were purchased from 1998 through October 2001 are the best to have. They earn great rates and should probably be held for a full 30 years. That is because they earn somewhere between 3 percent and 3.6 percent (the fixed rate), plus the current rate of inflation. Right now that total is between 6.15 percent and 6.76 percent. That is the best rate on savings anywhere. Remember that the total interest earned changes each six months and will reset again in May.

If you bought your Series I-bond between November 2001 and October 2002, you are currently earning 5.13 percent. A good deal and worth holding on to for now.

However, those who purchased from November 2002 to the present are earning much lower current rates — between 4.12 percent and 4.72 percent. Remember, the difference is based on when you originally bought your Series I-bond.

And looking at the rates I was earning, well, let’s just say that money would serve me better elsewhere. All of them were under 4%.

I’d have liked to cash out entirely, but I’ve got another 3 months to go until I can redeem the remaining funds (around $615) locked up. When the time comes, you can bet I’ll have a zero balance with the government. They’re just not competitive anymore.

As for what I’ll do with this “found” money, I haven’t made up my mind just yet.

I should throw it all into the ING Direct savings account, but I’m leaning more towards throwing around half of it at debt and the other half to my checking account to give myself more of a cash cushion — something I’ve been missing since the final siding payment cleared.