I bonds interest rates — TreasuryDirect (2024)

FAQs

What will the next I bond rate be in 2024? ›

The 4.28% composite rate for I bonds issued from May 2024 through October 2024 applies for the first six months after the issue date. The composite rate combines a 1.30% fixed rate of return with the 2.96% annualized rate of inflation as measured by the Consumer Price Index for all Urban Consumers (CPI-U).

The current I bond composite rate is 4.28%. This rate is nearly a percentage point lower than the previous rate. It applies for the first six months for bonds issued from May 2024 through October 2024.

The cons of investing in I-bonds

There's actually a limit on how much you can invest in I-bonds per year. The annual maximum in purchases is $10,000 worth of electronic I-bonds, although in some cases, you may be able to purchase an additional $5,000 worth of paper I-bonds using your tax refund.

Normally, you're limited to purchasing $10,000 per person on electronic Series I bonds per year. However, the government allows those with a federal tax refund to invest up to $5,000 of that refund into paper I bonds. So most investors think their annual investment tops out at $15,000 – one of the key I bond myths.

Can I cash it in before 30 years? You can cash in (redeem) your I bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest.

MBA: Rates Will Decline to 6.5% In its May Mortgage Finance Forecast, the Mortgage Bankers Association predicts that mortgage rates will fall from 6.9% in the second quarter of 2024 to 6.5% by the fourth quarter. The industry group expects rates will fall below the 6% threshold at the end of 2025.

Remember, when you cash out your I Bonds you don't earn the interest until you complete the month and that you lose the prior 3 months' interest. If you want to keep all your good interest and get the most out of your I Bonds you should cash out: after earning 3 months of lower interest and.

The fixed rate stays the same for the life of the bond. The inflation rate can change every six months from the issue date of the bond. When the inflation rate changes, the earnings rate does too.

You can count on a Series I bond to hold its value; that is, the bond's redemption value will not decline.

What are the disadvantages of TreasuryDirect? ›

Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.

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 ensure your cash is always safely out-earning inflation.

Note that I bonds must be held for at least 12 months before they can be sold. If you hold them for less than five years, you will forfeit three months of interest. You can buy more in TIPS, and their liquidity is an attractive option for some investors. Plus, TIPS pay a fixed interest rate semiannually.

The initial yield is only good for the first six months you own the bond. After that, the investment acts like any other variable vehicle, meaning rates could go down and you have no control over it. And if you wait until, say, 2026 to buy an I bond, the initial rate could be well below current levels.

As of June 14, 2024, the yield for a ten-year U.S. government bond was 4.2 percent, while the yield for a two-year bond was 4.67 percent. This represents an inverted yield curve, whereby bonds of longer maturities provide a lower yield, reflecting investors' expectations for a decline in long-term interest rates.

In May 2024, prices had increased by 3.3 percent compared to May 2023 according to the 12-month percentage change in the consumer price index — the monthly inflation rate for goods and services in the United States. The data represents U.S. city averages.

Line chart of I bond rates from May 2018 to May 2023. The rates are as follows: May 2018, 2.52%; November 2018, 2.83%; May 2019, 1.9%; November 2019, 2.22%; May 2020, 1.06%; November 2020, 1.68%; May 2021, 3.54%; November 2021, 7.12%; May 2022, 9.62%; November 2022, 6.89%; May 2023, 4.3%.

6 Month Treasury Bill Rate is at 5.14%, compared to 5.14% the previous market day and 5.23% last year. This is higher than the long term average of 4.49%. The 6 Month Treasury Bill Rate is the yield received for investing in a US government issued treasury bill that has a maturity of 6 months.