Missed the I Bonds Boom? Good News—You Can Still Lock in a Stellar Rate
Alright, so you blinked and missed out on I bonds during their jaw-dropping, historic high. Don’t worry—there’s no need to hang your head just yet. The U.S. Treasury is coming to the rescue with a new, juicy rate for those of us who weren’t quite fast enough on the trigger the first time.
Here’s the scoop: as of Tuesday, the Treasury announced the latest annualized rate for Series I Savings Bonds (or, as they affectionately call them, I bonds) is clocking in at a pretty dazzling 6.89% (source). Sure, that’s a little shy of the wild-eyed 9.62% party offered from May through October 28 (I know, ouch). And if you picked up I bonds in the window before last May, you’re feeling smug at your 7.12%.
But here’s the kicker: buy I bonds now through April 2023, and that 6.89% is yours—for six months. Fun fact: most experts figured the new rate would flop in at around 6.48%, so this is actually a win.
Inflation, Meet Your Match: How I Bonds Rates Are Set
Let’s address the elephant in the wallet: Why are I bond rates so spicy? It all comes down to inflation—the “I” isn’t for “Impressive,” but it easily could be. The Treasury reviews these rates every six months, adjusting their dials based on the latest inflation trends. Remember that time inflation took the express elevator to the top floor recently? That’s how we saw that record 9.62%.
This caused a full-on gold rush—so much so that Treasury’s site actually went belly-up under the demand as folks scrambled to snag the best rate. A Treasury spokesperson spilled the beans: $1 billion in I bonds were sold in just one Friday! October? That month raked in a record $7 billion.
Now, I know 6.89% looks a smidge lower, but let’s get real—for a government-guaranteed savings bond, it’s still as rare as hen’s teeth these days, and it’s locked in for six months. Not too shabby.
The Benefits of This New I Bond, Fixed Rate and All
There’s another little sweetener in the pot for the springtime shopper: the new fixed rate is now 0.40%. Previously, it was stuck at a flat zero. So what? Well, this “fixed” part stays the same for up to 30 years—yep, you read that right, three decades—until you decide to cash out or the bond grows up and matures.
Last round’s 9.62% I bonds? No fixed rate, all variable, inflation-driven, with zero wiggle room. In fact, fixed rates were MIA since May 2020. Only the ghosts of savings past remember when I bond rates hit 6% or more before—in 2005, for those keeping score.
A lot of financial pros are fans of treating I bonds like an inflation-protected savings account. They currently blow ordinary CDs (yes, we compare these for you) and high-yield savings (here are our favorites) out of the water. Hate to say it, but the national average savings account rate is a sad 0.21% (thanks, FDIC). Even the heroes of online banking—Ally at 2.35% APY and Capital One at 3%—can’t compare.
Here’s a nice little perk: I bond interest is free from state and local taxes. Plus, you only pay federal taxes when you cash out—unless you’re using them for qualified education costs (here’s the official info). In that case, Uncle Sam might even let you keep every penny.
How to Nab I Bonds at 6.89%: Not for the Click-and-Go Crowd
Still with me? Good. Because while I bonds might be the safest bet outside stuffing cash in your mattress, buying them isn’t as easy as, say, ordering Friday night takeout. TreasuryDirect (come prepared) is your only destination, and its reputation is…shall we say, “quirky.”
If you’re lucky (and type everything right), you could be in and out in 20 minutes. But misplace a detail, or need to update your info? You could be refreshing your inbox for days—maybe even weeks. (Patience is, sadly, not optional.)
Here’s the fine print: the annual purchase limit is $10,000 per person for electronic I bonds. Want more? There’s a trick! You can tack on another $5,000 in good old-fashioned paper I bonds via your federal tax refund. This means filling out Form 8888 (grab it here) when you file. Paper I bonds come in denominations from $50 up to $1,000, while electronic ones start at $25.
But wait—before you dream of easy money, there’s a catch on liquidity. Your cash is tied up for at least a year—no exceptions, unless your house just got visited by disaster (details). Oh, and if you cash out before five years, you’ll forfeit the last three months of interest. Sometimes, the best things take time!
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