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The U.S. Treasury Department announced that Series I bonds will pay 5.27% annual interest from November 1 through April 2024, up from the 4.3% annual rate offered since May.
Linked to inflation, investors can claim 5.27% for six months – the fourth highest I bond rate since 1998 – by purchasing anytime between November 1 and the end of April 2024.
How to calculate bond rates
The Treasury adjusts I bond rates every May and November, and I bond yields have two parts: a variable part and a fixed part.
The variable rate changes every six months based on inflation, and the Treasury can change the fixed rate every six months, but this doesn’t always happen.
The fixed part of the I bond rate remains the same for the investor after purchase. The variable rate is reset every six months from the date the investor purchased the I Bond, not when the Treasury announces new rates. You can find the price by date of purchase here.
Currently, the variable rate is 3.94% and the fixed rate is 1.30%, for a combined rounded yield of 5.27% on I Bonds purchased between November 1 and April 30.
“The new fixed rate makes it a really good deal” for long-term investors, said Ken Tumin, founder and editor-in-chief of DepositAccounts.com, which tracks I-bonds, among other assets.
How New Rates Affect Old Bonds I
If you already own I bonds, your rate change depends on the bond issue date.
For example, if you purchased I bonds in September of a given year, your rates reset each year on March 1 and September 1, according to Treasury.
However, the overall rate may be different from what you receive because the fixed rate remains the same for the duration of your bond.
What to Know Before Buying Bonds I
Before buying I bonds, it’s important to think about your goals, experts say.
One of the downsides of I Bonds is that you cannot access the money for at least a year and will trigger a three-month interest penalty by tapping the funds within five years.
“I don’t view bonds as part of a long-term portfolio,” said Christopher Flis, certified financial planner, founder of Resilient Asset Management in Memphis, Tennessee.
I bonds can make sense as a complement to savings that you can access more quickly, such as money in a checking account, savings account or money market funds, he said .
Frequently Asked Questions About Bonds I
1. What is the interest rate from November 1 to April 30, 2024? 5.27% per year.
2. How long will I receive 5.27%? Six months after purchase.
3. What is the deadline for obtaining 5.27% interest? The bonds must be issued before April 30, 2024. The purchase deadline may be earlier.
4. What are the purchase limits? $10,000 per person each calendar year, plus an additional $5,000 in Paper I Bonds through your federal tax refund.
5. Do I owe income taxes? You will have to pay federal income taxes on the interest earned, but no state or local taxes.
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