High-Yield U.S. Treasury Series I Bonds
Update (Oct. 9, 2022) – The record-high rate of 9.62% lasts for six months, but time is running out to get it. The Treasury will announce the new variable rate for I bonds on November 1st, and the last day to buy I bonds at the 9.62% rate will be Oct. 28. The Treasury is expected to offer a 6.47% interest rate for Series I Savings Bonds purchased from November 2022 through April 2023. Limit is $10,000 per year per person.
Update (Apr. 12, 2022) – The interest rate on inflation-adjusted U.S. savings bonds will approach 10% beginning in May. U.S. Treasury Series I Bonds, or I Bonds, will offer annual interest payments of 9.62%, based on the bond’s latest inflation rate calculation, which is tied to March’s consumer-price index. Prices rose by 8.5% year over year in March, the fastest pace since December 1981, according to the Bureau of Labor Statistics. (WSJ)
Update (Jan. 03, 2022) – The new year is here so you can buy another $10K per person. You have until April 30, 2022 to make your purchase and lock in the current rate of 7.12%.
The U.S. Department of the Treasury is paying a 7.12% annual rate on I bonds, an inflation-protected and nearly risk-free investment, through next April. This is an attractive proposition for those looking for relatively safe portfolio options.
An I bond is a savings bond with a twist. Instead of providing only a fixed rate of interest, it has a built-in inflation component that gets added every six months. That’s very valuable in today’s economic environment where inflation is at record highs.
If you buy an I bond between November 2021 and April 2022, you’ll get a 7.12% rate for the first six months. That means if you put $10,000 into I bonds now, you’ll have $10,356 in six months. After that, you’ll get a new interest rate, tied to the inflation rate at the time. You can see a chart of rates here.
There are some other things to be aware of when buying I bonds. First there’s a limit of $10,000 per calendar year. However, since the year is almost over, an individual may buy $10,000 today and another $10,000 on Jan. 1, 2022, or later. A couple may double those amounts for a total of $40,000, with a 7.12 interest rate. You may also purchase more I bonds through businesses, trusts or estates.
Once you invest in I bonds, you can’t access the funds for 12 months. If you redeem I bonds within the first five years, you will lose the last three months of interest. So if you cash out after 12 months, you are guaranteed at least a 3.56% return for the year. An I Bond has a 30-year maturity, which means it will pay interest for the next 30 years.
How to Buy I bonds
You can purchase electronic I bonds directly from TreasuryDirect. Here’s how it works:
- Go to TreasuryDirect.gov
- Click “open an account,” choose TreasuryDirect, then “apply now”
- Choose the type of account and provide personal information and funding account
- Create your password and reminders and account number will be emailed to you
- Log into your account and click “BuyDirect”, select Savings Bonds, I bonds