Key Takeaways
- I bond rates are adjusted twice a year based on the previous six months’ inflation readings. Using today’s release of new inflation data, we can calculate every existing I bond holder’s next 6-month rate.
- As expected (since inflation has been falling), everyone’s next I bond rate will move lower than their current 6-month rate—and the drop is more than a percentage point.
- For some, the rate adjustment will arrive as soon as Nov. 1. But for others, it will occur between Dec. 1 and April 1, depending on which month the bond was issued.
- With I bond rates now so low, you can earn much more with a top nationwide CD paying 4.00% to 5.50% APY. In addition, CD returns are predictable and can be guaranteed for years down the road.
- If you decide to sell your I bond, the 1st of the month is always the best day to do so.
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Next Rate for Existing I Bonds Can Now Be Calculated
I bonds are so named because they’re calibrated to inflation. Whenever inflation rises, I bonds pay more. If you now own I bonds, there’s a good chance you bought them within the last two to three years when decades-high U.S. inflation pushed I bond returns to their highest levels.
But inflation has cooled from a high of 9.1% in June 2022 to 2.4% in the September 2024 reading, which was released this morning. As inflation has decreased, I bond rates have also fallen, making them a less competitive savings option.
With today’s Consumer Price Index (CPI) in hand, Investopedia can now calculate what the next 6-month interest rate will be for existing I bonds, which will be officially unveiled by the U.S. Treasury on Nov. 1. When it comes to I bonds, each year, on May 1 and Nov. 1, the Treasury announces new rates that will be good for the following six months.
To understand how this works, here’s a quick primer on I bond rates, which consist of two components:
- The first component is a fixed rate, which is assigned to every I bond based on its issue date. This rate is fixed for the life of your I bond, up to its 30-year maturity date.
- The second component is the inflation rate, which is adjusted twice a year based on the last six monthly CPI readings.
Adding these two components together gives you a close estimate (within a few basis points) of the 6-month composite rate the Treasury will announce in three weeks.
To calculate your particular I bond’s upcoming composite rate, you’ll need to know your fixed rate, and, in addition, what the latest inflation component is. Fortunately, we’ve done the math for you. See below, for all I bonds issued since November 2021. By finding your bond’s issue date in the first column, you can see in the last column what your next 6-month yield will be.
Note that while the Treasury will announce these new rates on Nov. 1, the month the new rate will begin for you is based on the month your I bond was issued. As you can see below, only people with I bonds purchased in May or November (of any year) will earn the new rate indicated above on Nov. 1. For other issue dates, the start of the new rate will be delayed according to this schedule.
How Will Your New Rate Compare to Your Existing Rate?
Because inflation has dropped over the last six months, we calculate that the new inflation component of I bond rates will come down about a percentage point. So for anyone who bought during the especially popular I bond period of May through October 2022, their current rate of 2.96% will drop to about 1.90%. You can see how the new rate compares to the current rate for several issue dates below.
Want to know how the upcoming rate compares to further-back periods of your I bond? The table below lays out the various 6-month rates each I bond has or will earn.
Consider Moving Your Money to a CD to Earn More
With I bond rates for recent issues moving to a range of 1.90% to 3.20%, you can earn much more on your savings elsewhere. In fact, you can benefit from some lucky timing right now, as certificate of deposit (CD) rates soared in 2023—and are still paying rates not far below their historic peak. Dozens of nationally available certificates are paying rates in the 4% and 5% ranges, with the nationwide leader offering as much as 5.50% APY.
This means cashing out your I bonds (which you can do after owning them for at least 12 months) and moving the money into a top-paying CD could instantly boost your interest rate by 1 to 2 percentage points, or even more. While it’s true you’ll incur a penalty if your I bond is younger than five years old, it’s a relatively mild one: just three months of the latest interest rate.
Another good reason to swap I bond money for a CD is that it adds more certainty to your future returns. Unlike an I bond, with its rate that changes twice every year, a CD you open today will lock in its APY for the full duration of the certificate term. So if you open a multi-year CD, you’ll know your rate is guaranteed for two, three, or even five years down the road. And that’s a smart move right now given that U.S. interest rates have been falling.
The Best Day of the Month to Cash Out I Bonds
Monthly I bond interest payments from the U.S. Treasury are always paid right away on the first day of the month, and not again until the first of the next month. So once you’ve collected interest for a particular calendar month, say on the upcoming Nov. 1, there’s no reason or additional earnings to be gained by holding the funds any longer during November.
Also, if you’re going to move your I bond funds elsewhere, withdrawing on May 1 allows you to receive the May interest payment and then start earning interest as quickly as possible on that money elsewhere, such as a CD or high-yield savings account. So, by moving quickly, you can collect November interest on your money in two different places.
Even if you simply want to cash out and use your I bond funds, there’s no financial gain from waiting beyond the first of the month for your withdrawal.
Daily Rankings of the Best CDs and Savings Accounts
How We Find the Best Savings and CD Rates
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000.
Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.