Key Takeaways
- Since each I bond's rate adjusts every six months, roughly one in six current I bond holders will see their rate fall on Aug. 1.
- Because inflation has cooled, the latest I bond rate is approximately 1 percentage point lower than the last six-month rate.
- Our tables below show you exactly what rate your I bond is earning now, in addition to its new, lower rate—and when that will kick in.
- About half of current I bond holders have already seen their rate come down, while those with a February or August issue date will see their rate fall Thursday. Others will see their rate drop on Sept. 1 or Oct. 1.
- With your I bond rate either already under 3% or heading there soon, it's a great time to swap I bond money for one of today's best CDs—where you can guarantee a rate of up to 6% for months, or 5% for years.
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Your Current and Upcoming Rate for Existing I Bonds
U.S. Treasury I bonds get their name because they're pegged to inflation. Instead of offering a fixed interest rate, I bonds pay a variable rate that adjusts every six months to make sure your return keeps pace with the latest inflation rates.
Over the last two and a half years, I bond rates have experienced a heyday due to post-pandemic inflation that rose to a 40-year high in 2022. As a result, I bonds purchased by October of that year enjoyed 6-month rates of 9.62% or more—the highest rates paid since I bonds were launched in 1998.
Today, however, I bond rates are dramatically lower. That's because the Federal Reserve's aggressive rate-hike campaign has managed to tamp inflation down. And as a result, the most recently announced yield for newly purchased I bonds fell almost a full percentage point—from a previous 5.27% down to 4.28%.
If you have existing I bonds, your actual rate may differ from the new issue rate of 4.28%. But no matter when you bought your bond, you'll see a rate drop of about a percentage point between May 1 and Oct. 1, 2024. So it's smart to find out what your particular bond rate is now—and what it will be changing to.
To figure out your current and upcoming rates, you must first determine the month of your I bond's issue date. Once you have that, you can reference the table below to find out your bond's particular rate details.
As you can see, anyone with an I bond issued in May, June, July, November, December, or January—no matter what year—has already had their rate reduced. If you find yourself in that camp (and you've had your I bond for at least the minimum 12-month holding period), you should consider if the current rate is appealing enough to stick with the I bond. Otherwise, you may find that now is a good time to exit so you can earn a higher return elsewhere.
For those with any February or August issue date, your new lower rate will begin this week with the Aug. 1 rate adjustment. Like the I bond holders who are already earning a lower rate, you too should consider if you want to keep your I bond in light of the upcoming rate.
Finally, anyone with an issue date in the remaining months (March, April, September, or October) still has a little runway left on their current rate. For these I bonds, your rate won't change until the first of September or October, depending on your bond's issue date.
Have an Older I Bond?
If you hold I bonds purchased earlier than November 2021, you can find your current and upcoming interest rates in the U.S. Treasury's I Bond Rate Chart. Then, use the table below to determine which month the newest rate will take effect for your particular bond.
It's a Smart Time to Move I Bond Money to a Top-Paying CD
If you don't need your I bond money for a while, you have a lucky opportunity: I bond rates are declining at the same time that certificate of deposit (CD) rates are exceptionally high. For instance, you could cash in your I bonds and move that money to a 6-month or 1-year CD paying in the mid-5% range—or even as high as 6.00% APY. You could lock in a record rate for longer, such as a 2-year CD paying 5.10%. Or maybe you don't need the money for years and are interested in guaranteeing a 4.75% rate for five years.
Leading 6% CD Rate Expected to Disappear Aug. 1
The nation-leading CD is a 6% offer for 10 months from Nuvision Credit Union. But it's advertised as expiring July 31. So, barring an extension, there are just two days left to snag that rate. Fortunately, dozens of other CDs pay 5% or better for months or even years down the road.
Taxable Status of I Bond vs. CD Earnings
Interest paid on CDs is taxed like all other income at the federal and state level, but I bond earnings are exempt from state and local taxes (they aren't exempt from federal taxes). So to make a direct comparison between I bond and CD earnings, you’d need to account for any state income tax you’d pay on the CD interest. Still, if a CD rate is significantly higher than your I bond rate, you’ll end up earning more with the CD.
While it's possible I bond rates could climb higher, odds are arguably greater they'll instead fall even further. That's because the Federal Reserve remains committed to fighting inflation until it comes down to the Fed's target level of 2% (the latest reading was 3%). Of course, there's no crystal ball to know if and when inflation will drop as far as the Fed's target. But the central bank's focus on its inflation goal is strong and persistent.
Unlike I bonds, CDs have the advantage of promising a fixed annual percentage yield (APY) that you're guaranteed for the certificate's full term. So there's no guessing game about what you'll earn in the future because the Fed's interest rate moves will have no bearing on existing CD rates. With CD returns not far below their highest levels in more than 20 years, it's an excellent time to secure one of these locked-in rates.
Deciding if I Bonds or CDs Are Better for You
Choosing between today's I bonds and CDs can come down to how long you want to leave your money untouched. If you're stashing cash for just a few years, locking in one of today's historically high CD rates is the better bet. But for long-haul savings, I bonds can provide the peace of mind that your cash will always safely out-earn inflation.
The Best Month—and Day—to Cash Out I Bonds
Money held in I bonds can be withdrawn anytime after you've held the bond for a year. But there's a catch. For any I bond cashed in sooner than five years from its issue date, you'll incur a penalty. Fortunately, the penalty is fairly mild, calculated as the last three months' worth of interest.
If you decide to cash in your I bond, it's useful to choose the best withdrawal date. Monthly interest for I bonds is always paid on the first of the month and is not pro-rated throughout the month. Whether you cash out on Aug. 1 or Aug. 31, you'll receive the same interest payment on Aug. 1—and nothing more until Sept. 1. So it's smart to withdraw as early as possible in a month—ideally on the 1st—so you can move the money somewhere it can start earning a higher interest rate as quickly as possible.
Unsure About Committing to a CD?
If you're not keen on locking your funds into a CD, you can also move your I bond money to one of the best high-yield savings accounts or best money market accounts, which are paying rates as high as 5.55% and 5.35% APY, respectively. But keep in mind that savings and money market account rates are variable, meaning they can be lowered at any time.
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. It also cannot specify a maximum deposit amount that's below $5,000.
Banks must be available in at least 40 states to qualify as nationally available. 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.
