Series I Bond :: May through October 2023
4.3% for I bonds issued May through October 2023.
Earlier this month Treasury updated the Series I bond rates. The new rate for I bonds purchased between May and October is 4.3%. This rate consists of a 0.9% fixed rate that will not change during the life of the bond, and a 1.69% semiannual inflation rate for the initial six months of ownership. The example below from the TreasuryDirect.gov website details the current I bond rate calculation:
The new rate is down considerably from the prior 6.89% I bond rate. Although the fixed rate component increased from 0.4% to 0.9%, the six-month CPI inflation adjustment declined from 3.24% to 1.69%.
If you already own I bonds, this table shows you how the May 1st inflation update will alter your composite rate:
One of the questions we often get is: Should I redeem my current I bond and reinvest the proceeds into the new I bond? Let’s walk through some considerations to help you make this decision.
Taxes. One of the benefits of Series I and EE savings bonds is that you are able to defer the tax liability until you receive the interest earned on the bond. This is a wonderful benefit to owning I bonds. It is generally unattractive to redeem an older I bond and trigger the tax liability.
Purchase Limits. One of the most common I bond complaints we hear is the relatively low annual purchase limit of $10,000 in electronic I bonds. If you are already bumping up against the purchase limit, redeeming your existing I bonds isn’t the best choice.
Early Redemption Penalty. You are required to hold onto your I bond for at least one year. After one year, you may redeem an I bond. However, if you redeem an I bond after one year but before five years, you will lose the most recent 3 months of interest. Therefore, you generally only want to consider early redemption during periods when the I bond composite rate is extremely low.
We think the current Series I bond rate is an attractive investment. The 0.9% fixed rate is generous when looking at I bond announcements over the past 15 years. The last time the fixed rate was higher than 0.9% was all the way back in April 2008, when it was 1.2%. If you decide to purchase an I bond, we recommend making your purchase later in the month. Treasury will back-date your purchase to the first day of the month of purchase. Therefore, if you purchase I bonds in the last few days of the month you can earn nearly one free month of interest. The easiest way to purchase Series I Savings Bonds is at TreasuryDirect.gov.