Thats a steep decline from the headline-grabbing 9.62% rate investors enjoyed from May through November 2022.
I bond rates are tied to inflation, so as inflation cools, rates decline.
And as interest rates rise, other safe investments likecertificates of depositand even high-yield savings accounts become more appealing.
Want to learn to invest in bonds? Check out our guide for beginners.
So, are I bonds still a red-hot buy?
Or are there better places to stash your cash?
What Are I Bonds?
Series I bonds are an inflation-protected security sold by theU.S.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Ask one of these companies to help… (Historically, the U.S. government has never defaulted on bonds.)
How Do I Bonds Work?
It goes up or down based on the growth of inflation over the last six months.
While the six-month variable rate is down, this is the highest fixed rate for I bonds since 2007.
That fixed rate doesnt change over the life of the bond.
Why Did the I Bond Rate Go Down on May 1?
I bonds are tied to inflation, and inflation is still high.
So why did the I bond rate drop 2.5 percentage points on May 1?
You wont lose money if the interest rate goes down though you just wont earn as much.
First, these are 30-year bonds.
The government wont allow you to cash out an I bond any sooner.
You may be able to forgo paying federal tax altogether by using the bonds for higher education costs.
How to Purchase I Bonds
The fastest and easiest way to purchase I bonds is on theTreasuryDirectwebsite.
Its a free and secure platform where you might view all your account information, including pending transactions.
you could also give I bonds as a gift.
Another option is buying I bonds at tax time with your refund.
you’ve got the option to buy I bonds in increments of $50 this way.
FYI: You cant resell I bonds, and you must cash them out directly with the U.S. government.
Also, only U.S. citizens, residents and employees can purchase these bonds.
Who Are I Bonds Right For?
There are a few ways investors can benefit from purchasing I bonds at the current 4.3% rate.
Its also worth exploring other safe investments that might earn a better rate than I bonds.
I bonds wont make you rich.
But for everyday Americans, these investments offer a safe way to grow your cash and hedge against inflation.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
When you log into your bank account, how do your savings look?
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
