Series I bonds are ‘still a good deal’ despite an expected falling rate in May, experts say (2024)

FAQs

Series I bonds are ‘still a good deal’ despite an expected falling rate in May, experts say? ›

The annual rate for Series I bonds could fall below 5% in May based on inflation and other factors, financial experts say. That would be lower than the current 5.27% interest on I bond purchases made before May 1, but higher than the 4.3% interest offered on new I bonds bought between May 1, 2023, and Oct.

The May I Bond composite rate is 4.28% (US Treasury) which is 2.14% earned over 6 months. Breaking News: Official Treasury I Bond Rate announced! The May 2024 I Bond Fixed Rate is 1.30%.

Series I bonds will pay 4.28% annual interest from May 1 through October 2024, the U.S. Department of the Treasury announced Tuesday. Linked to inflation, the latest I bond rate is down from the 5.27% annual rate offered since November and slightly lower than the 4.3% from May 2023.

I bond cons

The initial rate is only guaranteed for the first six months of ownership. After that, the rate can fall, down to a fixed-rate component which, as of May 2024, stood at 1.3%. One-year lockup.

The U.S. Department of the Treasury adjusts I bond rates — with a variable and fixed-rate portion — every May and November. Based on the last six months of inflation data, the variable portion will fall from 3.94% to 2.96% in May. The fixed-rate portion is harder to predict, but experts say it could stay close to 1.3%.

Can I cash it in before 30 years? You can cash in (redeem) your I bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest.

I bonds issued from May 1, 2024, to Oct. 31, 2024, have a composite rate of 4.28%. That includes a 1.30% fixed rate and a 1.48% inflation rate. Because the U.S. government backs I bonds, they're considered relatively safe investments.

What is the current I bond rate? The current composite I bond rate is 4.28%. This includes a 1.30% fixed rate and a 1.48% inflation rate. The current rate applies for six months to bonds purchased between May 1, 2024, and Oct.

Yes, you can purchase up to $10,000 in electronic I bonds each calendar year. You can also buy an additional $5,000 in paper I bonds using your federal tax return.

I bonds earn interest from the first day of the month you buy them. Twice a year, we add all the interest the bond earned in the previous 6 months to the main (principal) value of the bond.

Can you ever lose money on an I bond? ›

You can count on a Series I bond to hold its value; that is, the bond's redemption value will not decline.

Chances are you bought your I Bonds at the 0.0% fixed rate in 2021 or 2022, so as they are renewing your rates are coming in below 4%, compared to other interest rate accounts at roughly 5%. Keep in mind that cashing out in the first 5 years will cause you to lose your prior 3 months' interest.

You can skip paying taxes on interest earned with Series EE and Series I savings bonds if you're using the money to pay for qualified higher education costs. That includes expenses you pay for yourself, your spouse or a qualified dependent. Only certain qualified higher education costs are covered, including: Tuition.

May 1, 2024. Series EE savings bonds issued May 2024 through October 2024 will earn an annual fixed rate of 2.70% and Series I savings bonds will earn a composite rate of 4.28%, a portion of which is indexed to inflation every six months. The EE bond fixed rate applies to a bond's 20-year original maturity.

I recommend setting the date at April 25 or 26 to give Treasury time to complete the transaction in April. If you wait until April 30, your I Bond will be issued in May. The rollover strategy. With the variable rate dropping to 2.96%, I Bonds with a fixed rate of 0.0% will be paying 2.96% for six months.

Should I only buy bonds when interest rates are high? There are advantages to purchasing bonds after interest rates have risen. Along with generating a larger income stream, such bonds may be subject to less interest rate risk, as there may be a reduced chance of rates moving significantly higher from current levels.

But until the Fed sees evidence of slowing economic growth, interest rates will stay higher for longer. The 30-year fixed mortgage rate is expected to fall to the mid-6% range through the end of 2024, potentially dipping into high-5% territory by the end of 2025.

6 Month Treasury Bill Rate is at 5.18%, compared to 5.18% the previous market day and 5.20% last year. This is higher than the long term average of 4.49%. The 6 Month Treasury Bill Rate is the yield received for investing in a US government issued treasury bill that has a maturity of 6 months.

How much tax do I owe on my I bonds? Interest on I bonds is exempt from state and local taxes but taxed at the federal level at ordinary income-tax rates.