I bonds interest rates — TreasuryDirect (2024)

FAQs

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

May 1, 2024. Series EE savings bonds issued May 2024 through October 2024 will earn an annual fixed rate of 2.70% and Series I savings bonds will earn a composite rate of 4.28%, a portion of which is indexed to inflation every six months.

Cons of Buying I Bonds

I bonds are meant for longer-term investors. If you don't hold on to your I bond for a full year, you will not receive any interest. You must create an account at TreasuryDirect to buy I bonds; they cannot be purchased through your custodian, online investment account, or local bank.

The current composite I bond rate is 4.28%. This includes a 1.30% fixed rate and a 1.48% inflation rate. The current rate applies for six months to bonds purchased between May 1, 2024, and Oct. 31, 2024.

Whether I bonds make sense for you depends on your goals. If you only want to beat inflation, they'll ensure that you succeed. But if their $15,000 annual investment ceiling, withdrawal restrictions and interest rate uncertainty are turn offs, there are alternatives.

Paper I bonds are only available in multiples of $50.” There are also limits on how many I bonds you can buy each year. Individual purchase limits for I bonds are $15,000 per calendar year — $10,000 worth of electronic I bonds and $5,000 worth of paper I bonds.

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.

The interest rate on a Series I savings bond changes every 6 months, based on inflation. The rate can go up. The rate can go down. I bonds earn interest until the first of these events: You cash in the bond or the bond reaches 30 years old.

Is interest income from I bonds taxed as capital gains? No, the interest income earned from I bonds is not considered a capital gain and is therefore taxed differently. Instead, it is taxed as regular income at the federal level and exempt from state and local taxes.

I bonds issued from May 1, 2024, to Oct. 31, 2024, have a composite rate of 4.28%. That includes a 1.30% fixed rate and a 1.48% inflation rate. Because the U.S. government backs I bonds, they're considered relatively safe investments.

TIPS offer greater liquidity and the higher yearly limit allows you to stash far more cash in TIPS than I-bonds. If you're saving for education, I-bonds may be the way to go.

Can you ever lose money on an I bond? ›

Answer: No. In periods of deflation, the bond's redemption value won't decline.

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.

During the Fed's June 2024 rate-setting meeting, policymakers voted again to hold the target range steady at 5.25% to 5.5%, and it appears the central bank has finished its tightening cycle.

The interest rate determined for fiscal year 2024 in accordance with the above-quoted formula is 4.0332% which adjusted to the nearest 1/8 of 1% is 4%.

On the basis of these inflation forecasts, average consumer price inflation should be 3.2% in 2024 and 2.0% in 2025, compared to 4.06% in 2023 and 9.59% in 2022.

6 Month Treasury Bill Rate is at 5.11%, compared to 5.12% the previous market day and 5.27% 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.