Zero Percent Certificate of Indebtedness as an investment
Wednesday, October 27th, 2004
Categorized as: Treasury Direct
In what investment situations would you use the Zero Percent Certificate of Indebtedness (C of I) account in Treasury Direct?
Tom's response
The Zero Percent C of I isn't meant as an investment, but just as a temporary holding area for money you have deposited into your TreasuryDirect account.
You can move money into a C of I by selecting that option when redeeming a TreasuryDirect security, by scheduled deposits from a payroll savings plan or other type of scheduled investment, or by making a transfer from your bank account.
You can move money out of a C of I by buying a Savings Bond or making a transfer to your bank account.



Hi Tom. Are Zero-Percent C of I just as safe and secure as short term Treasury Bills are? What's to prevent a person from just leaving funds into a Zero-Percent C of I for a long period of time? It seems to me that with the low interest rates that short term T-Bills are yielding now, one could just as well leave funds into a Zero-Percent C of I and have an apparent advantage of having a more liquid investment as opposed to keeping funds into short term T-Bills.
Rick - brilliant analysis! You're right - the C of I gives you more liquidity with hardly any interest rate penalty. The safety is the same as any other government security.
Tom Adams