The higher fixed rate gives savers a "much better long term play with I Bonds," Pederson said. You'd essentially be getting a rate of nearly 1% above inflation for 30-years, said Pederson. The higher fixed rate being offered on new I Bonds now gives savers more incentive to sock away cash into I Bonds for the long run. Negative inflation occurred twice in 25 years, Daniel Pederson, a Michigan-based savings bond expert and founder of noted, once for a six-month period that began in May 2009 and then in May 2015. If we see negative inflation, known as deflation, the net return for a given six-month period could go below that fixed rate. Savers who bought I Bonds through the early 2000s had some solid fixed rates and wouldn't want to rush to cash in those bonds. When I Bonds were first introduced in September 1998, for example, the fixed rate was an extremely attractive 3.4%. But remember, the inflation adjusted rate is added on top of any fixed rate, which lasts for the life of the bond. The fixed rate is too often an overlooked part of the inflation-indexed U.S. But they shouldn't ignore that 0.9% fixed rate. Savers won't be too excited about 4.3% for I Bonds. More: Buy I Bonds before May to lock in rate before it's gone More: Savers see last-chance in April to get I Bond rates at nearly 7% If you bought I Bonds issued from November 2022 through April, you locked in the attractive 6.89% that applies for six months after your purchase. That rate applied to I Bonds issued from May 2022 through October 2022. For a chunk of last year, savers had a chance to lock in an annualized rate of 9.62% for six months after the bond was issued. I Bonds had far more of a rock star quality recently. Interest is added monthly and compounded semiannually. ![]() ![]() The inflation-adjusted rate, which changes every six months, is added on top of the fixed rate.įor I Bonds issued now through October, an annualized inflation-adjusted rate of 3.38% is added on top of the fixed rate. That's up considerably from the 0.4% fixed rate that remains on I Bonds bought from November 2022 through April. The Treasury Department's Bureau of Fiscal Service has announced that I Bonds bought from May through October now will carry a higher fixed rate of 0.9% that applies to the 30-year life of the bond. But many savers who still plan to buy more I Bonds got a welcome surprise anyway. Rates on I Bonds issued now have fallen to 4.3%, thanks to a drop in inflation.
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