Key Takeaways
- Each I bond’s rate adjusts every six months. That means about one in six current I bond holders will see their rate change on Sept. 1.
- Because inflation has cooled, the new I bond rate will be approximately 1 percentage point lower than the last six-month rate.
- Our tables show what your particular I bond is earning today, what its new rate will be, and the date the new rate will kick in.
- If you find your I bond is or will be paying in the 2%-3% range, it’s a great time to swap money into one of today’s best CDs—where you can guarantee 4%-5% returns for years to come.
- For those who’ve decided to exit their I bonds, the best time to cash out is as early in the month as possible.
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Current and New I Bond Rates: Are They Worth Holding Onto?
Depending on your I bond rate, it may be a good time to cash in the bond and put the money somewhere it can earn more. But first you have to know how much you’re earning—and that rate is a moving target.
U.S. Treasury I bonds get their name for being pegged to inflation. Instead of offering a fixed interest rate, I bonds pay a variable rate that adjusts every six months to guarantee your return keeps pace with the latest inflation rates.
Over the last two and a half years, I bond rates have experienced a heyday due to post-pandemic inflation that rose to a 40-year high in 2022. As a result, I bonds purchased by October of that year enjoyed 6-month rates of 9.62% or more—the highest rates paid since I bonds were launched in 1998.
Today, however, I bond rates are dramatically lower. That’s because the Federal Reserve’s aggressive rate-hike campaign has tamed inflation. And as a result, the most recently announced yield for newly purchased I bonds fell almost a full percentage point—from a previous 5.27% down to 4.28%.
If you have existing I bonds, your actual rate may differ from the new issue rate of 4.28%. But no matter when you bought your bond, you’ll see a rate drop of about a percentage point between May 1 and Oct. 1, 2024.
To figure out your current and upcoming rates, first determine the month of your I bond’s issue date. Once you have that, you can reference the table below to find your bond’s rate details.
As you can see, anyone with an I bond issued in any year during the months of May, June, July, August, November, December, January, or February has already had their rate reduced. If you’re in that camp (and you’ve had your I bond for at least the minimum 12-month holding period), you should consider if the current rate is appealing enough to hold onto. Otherwise, you may find that now is a good time to exit so you can earn a higher return elsewhere.
For those with a March or September issue date—no matter what year—your new lower rate will begin this weekend with the Sept. 1 rate adjustment. Like the I bond holders who are already earning a lower rate, you too should consider if you want to keep your I bond in light of the upcoming rate.
Finally, anyone with an issue date in the remaining months of April and October still has a little runway left on their current rate. For those I bonds, the rate won’t change until Oct. 1.
Have an Older I Bond?
Have I bonds purchased earlier than November 2021? You can find your current and upcoming interest rates in the U.S. Treasury’s I Bond Rate Chart. Then, use the table below to determine which month the newest rate will take effect for your particular bond.
It’s a Smart Time to Move I Bond Money to a CD. But Don’t Delay!
If you don’t need your I bond money for a while, you have a lucky opportunity: while I bond rates are declining, certificates of deposit (CDs) are paying exceptionally high rates—at least for now.
In fact, current CD returns aren’t far below their highest levels in more than 20 years, making it an excellent time to secure one of these locked-in rates.
Not only that, but I bond rates are likely to fall further. That’s because the Federal Reserve remains committed to fighting inflation until it comes down to the Fed’s target level of 2% (the latest reading was 2.9%). And when inflation is trending downward, I bond rates move lower as well.
Unlike I bonds, CDs have the advantage of promising a fixed annual percentage yield (APY) that’s guaranteed for the certificate’s full term. That means there’s no guessing what you’ll earn in the future since inflation and the Fed’s interest rate moves will not impact the rates of existing CDs.
But, you’d be smart to act fast—as CD rates are currently drifting lower in anticipation of coming interest-rate cuts by the Federal Reserve. The first reduction of the federal funds rate is almost certain to be announced next month, and additional rate reductions appear likely in November and December. Further rate cuts in 2025 are also quite possible.
This will cause banks and credit unions to keep lowering their CD rates. So the sooner you can lock in one of today’s top nationwide rates—and for the longest term you can manage—the better.
Deciding if I Bonds or CDs Are Better for You
Choosing between today’s I bonds and CDs can come down to how long you want to leave your money untouched. If you’re stashing cash for just a few years, locking in one of today’s historically high CD rates is the better bet. But for long-haul savings, I bonds can provide the peace of mind that your cash will always safely out-earn inflation.
Taxable Status of I Bond vs. CD Earnings
Interest paid on CDs is taxed like all other income at the federal and state level, but I bond earnings are exempt from state and local taxes (they aren’t exempt from federal taxes). So, to make a direct comparison between I bond and CD earnings, you’d need to account for any state income tax you’d pay on the CD interest. Still, if a CD rate is significantly higher than your I bond rate, you’ll end up earning more with the CD.
The Best Day of the Month to Cash Out I Bonds
Money held in I bonds can be withdrawn anytime after you’ve held the bond for a year. But there’s a catch. For any I bond cashed in sooner than five years from its issue date, you’ll incur a penalty. Fortunately, the penalty is fairly mild, calculated as the last three months’ worth of interest.
If you decide to cash in your I bond, it’s useful to choose the best withdrawal date. Monthly interest for I bonds is always paid on the first of the month and is not pro-rated throughout the month. Whether you cash out on Aug. 1 or Aug. 31, you’ll receive the same interest payment on Aug. 1—and nothing more until Sept. 1. So it’s smart to withdraw as early as possible in a month—ideally on the 1st—so you can move the money somewhere it can start earning a higher interest rate as quickly as possible.
Unsure About Committing to a CD?
If you’re not keen on locking your funds into a CD, you can also move your I bond money to one of the best high-yield savings accounts or best money market accounts, which are paying rates as high as 5.50% and 5.35% APY, respectively. But keep in mind that savings and money market account rates are variable, meaning they can be lowered at any time.
How We Find the Best Savings and CD Rates
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.
Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.
