Series I Bonds Rate Falls to 4.3%
The interest rate offered on Series I Savings Bonds dropped to 4.30% from 6.89% as inflation settles down.
The new interest rate will be offered through October 2023, before the next, six-month rate adjustment.
Inflation has fallen in recent months, and many were expecting the rate on Series I Bonds to actually drop below 3% in May.
The interest rate offered on these bonds is tied to inflation. As the Consumer Price Index (CPI) has declined, so to has the interest rate offered on I Bonds.
Should you sell your Series I Bonds?
As interest rates have climbed, the rates offered on high-yield savings accounts and money-market funds have also risen.
You can now earn over 4.50% in annual interest in a high-yield savings account or money-market fund without giving up any liquidity.
Keep in mind, you cannot redeem your Series I Bonds until you’ve held them for one year, and if you sell them in the first five years, you must forfeit the last three months of interest payments.
If you’ve held your bonds for one year already—and you’re not in need of cash—it doesn’t hurt keeping them through the next six months to earn the new 4.3% rate, which is just about what you might earn in a high-yield savings account.
It’s likely that the interest rate on Series I Bonds will fall even further in October, with the next six-month interest-rate adjustment, assuming inflation continues to drop between now and then.
It may be in your best interest to wait and see what the October Series I Bonds rate looks like before pulling the trigger on redeeming them now. You can then compare the adjusted rate with high-yield savings and money-market offerings to see which makes the most sense for you.
Make sure you take full advantage if FDIC insurance with your bank accounts if you end up redeeming your I Bonds this year.
Do you have questions about Series I Bonds? Reach out to me at Ben@coveplanning.com or schedule a free consultation call.
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Ben Smith is a fee-only financial advisor and CERTIFIED FINANCIAL PLANNER™ (CFP®) Professional with offices in Milwaukee, WI, Evanston, IL and Minneapolis, MN, serving clients virtually across the country. Cove Financial Planning provides comprehensive financial planning and investment management services to individuals and families, regardless of location, with a focus on Socially Responsible Investing (SRI).
Ben acts as a fiduciary for his clients. He does not sell financial products or take commissions. Simply put, he sits on your side of the table and always works in your best interest. Learn more how we can help you Do Well While Doing Good!
Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Ben Smith, and all rights are reserved. Read the full Disclaimer.