Current I bond rate and history (2024)

Key points

• Low-risk, inflation-linked I bonds may be worth considering.
• Interest earned in the previous six months is added to the bond’s principal.
• The Treasury sets new I bond interest rates in May and November.

Bonds have historically been considered conservative fixed-income investments, less flashy than stocks. But Series I savings bonds have recently become more exciting and attractive. They can also help hedge against inflation.

While the I bond interest rate isn’t at its highest, it far outpaces what you’ll likely get from a savings account.

Ready to diversify your portfolio with I bonds? Read on to learn more about these low-risk investments.

U.S. Treasury announces new I bond rate

If you’re wondering what the buzz around I bonds is, the answer lies in their interest rate. 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. For example, if you purchased I bonds on May 1, the 4.28% rate would be in effect until Oct. 31, 2024.

The fixed rate for I bonds is announced every six months: May 1 and Nov. 1. It applies to the I bonds issued for the next six months.

The inflation rate, which is related to the consumer price index, usually changes every six months too. It’s set at the same time: May 1 and Nov. 1.

I bond rate history

“Since the I bond was first introduced in 1998, the interest rate has ranged from a low of 0% to a high (of) over 13%,” said Michael Schulman, chief investment officer of Running Point Capital Advisors. “Your rate, of course, depends on when the bond was issued and the six-month period it was tracked.”

You can view I bond rates from 1998 to 2024 on the U.S. Treasury website. The highest fixed rate of 3.60% was established on May 1, 2000. The highest inflation rate of 4.81% was set on May 1, 2022.

Here’s how I bond rates have changed over the years.

How are I bond rates set?

The U.S. Treasury sets I bond rates every May and November. Two things factor into how rates are set:

• Fixed rate.
• Inflation rate.

The fixed rate remains the same for the life of the I bond. It’s currently 1.30%. Whether this rate will change in November depends on whether the Treasury decides to adjust or leave it as is.

The inflation rate adjusts every six months for as long as you hold your I bond. It’s based on the consumer price index. This is a measure of changes in prices for a basket of goods and services. The inflation rate for I bonds is 1.48%. Note that during a period of deflation, the inflation rate can be negative.

I bond composite rate calculation

The fixed and inflation rates determine the composite rate, or actual rate, of return.

Here’s how a 4.28% composite rate is calculated:

[0.00130 + (2 x 0.0148) + (0.00130 x 0.0148)] = [0.0130 + 0.0296 + 0.0001924]

Adding the parts gives you 0.0427924, which is then rounded to 4.28%

If you purchase an I bond from May 1, 2024, to Oct. 31, 2024, you’ll get that annualized 4.28% return for the first six months. That’s pretty impressive.

How do you check I bond returns?

You can check returns on your bonds by logging in to your TreasuryDirect account.

The U.S. Treasury website also offers a handy growth calculator to estimate the rate of return on your bonds over time. You simply input different variables, including your initial investment amount and expected interest rate, to calculate potential returns over time. When you’re ready to cash in your I bonds electronically, you can do so through TreasuryDirect.gov.

How to sell your I bonds

You can sell I bonds through TreasuryDirect.gov. Some banks also cash in paper I bonds. But be sure to check beforehand. They may restrict how much you can cash in at one time. Remember to ask what documents you should bring.

Cashing in electronic I bonds

Through TreasuryDirect.gov, you can cash in electronic I bonds in any amount of $25 or greater to the penny. If you cash in only part of your bond’s total value, you must leave at least $25 in your account. You will receive interest only on the part you cash in.

To sell your electronic I bonds on TreasuryDirect.gov, follow these steps:

1. Log in to your TreasuryDirect account.
2. Navigate to ManageDirect.
3. Follow the link for cashing securities.

Cashing in paper I bonds

Paper I bonds may be cashed at local banks or online through TreasuryDirect.gov. You must cash in the entire bond at once.

To sell paper I bonds on TreasuryDirect.gov, follow these steps:

1. Do not sign the bonds.
2. Download and complete FS Form 1522, which is available on TreasuryDirect.gov.
3. Have your signature certified if you are cashing in more than $1,000 worth of bonds.
4. Mail the form and the paper I bonds to the address listed on FS Form 1522.

Are I bonds a good investment?

“I bonds are virtually risk-free investments,” said Sankar Sharma, founder of trading education website Risk Reward Return. “Their value doesn’t go down, and they offer tax benefits. Not only can bonds be used to beat inflation, but they can also be gifted or used to pay for education or simply supplement your retirement income.”

There’s one caveat to be aware of, though. If you buy I bonds, your money will be tied up for at least a year. Need access to your money sooner? It may be wise to put your cash elsewhere.

You’ll also forfeit the last three months of interest if you cash out before holding your bonds for five years. And you’re limited each year to buying up to $10,000 in online I bonds and an additional $5,000 in paper I bonds. Paper I bonds must be purchased with your federal tax refund.

Alternatives to I bonds

I bonds aren’t the only low-risk way to diversify your investments. Here are a few other options you may want to consider.

Series EE bonds

Series EE bonds are a second type of savings bond the U.S. government offers. The 2.70% interest rate on EE bonds is lower than the 4.28% interest rate on I bonds. But EE bonds earn that interest for at least 20 years. And the government guarantees your EE bond will double in value in 20 years.

Treasury inflation-protected securities

The government sells TIPS for terms of five, 10 and 30 years. Note that the principal of a TIPS can increase or decrease over its term. But TreasuryDirect notes you’ll get the original amount back if your TIPS matures and the principal is less than the original amount.

Certificates of deposit

Most banks offer CDs. They pay a fixed annual percentage yield on money held for a certain period. The best CDs offer interest rates of 5.00% or more for one-year terms.

Frequently asked questions (FAQs)