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Sabrina Karl
:max_bytes(150000):strip_icc()/SabrinaKarlBio-fec3f52216e94fc5b9dfea3f4b794140.jpeg "Still Holding I Bonds? May 1 Is a Smart Time to Move Your Money to a CD (1)")
Full Bio
Sabrina Karl has over two decades of experience writing about savings, CDs, and other banking topics. She is currently a staff writer at Investopedia and one of the country's top experts on how to earn as much as possible on the money you hold in the bank. She previously wrote for Bankrate.com, CreditCards.com, DepositAccounts.com, and RateSeeker.
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Published April 24, 2024
Key Takeaways
- U.S. Treasury I bonds purchased between November 2021 and October 2022 paid as much as 9.62% for a six-month period. But today's return on those bonds is below 4%.
- Meanwhile, CD rates have skyrocketed—dozens of the best nationwide CDs pay well above 5% APY. That makes it a smart time to move I bond money to a CD.
- I bonds can be redeemed anytime after their one-year anniversary, though you'll pay a penalty if the bond is less than five years old.
- For many I bond holders, the penalty will be less than what you can gain from moving the money where it will earn a higher return.
- Whenever you decide to cash out, the smartest withdrawal day is always the first of the month—making May 1 a great withdrawal date.
:max_bytes(150000):strip_icc()/4-24v2-0973e458df7f442285db6ad7a237cd79.png "Still Holding I Bonds? May 1 Is a Smart Time to Move Your Money to a CD (2)")
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I Bonds Were Wildly Popular in 2022—But Rates Have Fallen
2022 was a historic year for I bonds. After unveiling a rate of 7.12% in November 2021, the U.S. Treasury-issued bonds moved to an even higher rate in May 2022, offering a whopping 9.62%. Since that looks more like a stock market return than what you can usually expect from a safe, risk-free investment, legions of Americans snapped up these bonds.
But I bond rates are indexed to inflation (hence the name), and now that inflation has cooled, the current rate for I bonds purchased between November 2021 and October 2022 has fallen to 3.94%. Not only that but the next 6-month rate, which will be announced on May 1, is expected to drop the return on existing I bonds another percentage point.
If you were one of the many who bought bonds during this period, it means you can earn significantly more by moving your money to a top-paying CD. In fact, today's best nationwide CDs are offering up to 5.60% APY, with options to earn above 5% in every term for up to 3 years. CD rates you can lock in for 4 or 5 years are also out-paying I bonds, with top rates in the mid-4% range.
In addition, CD's offer guaranteed predictability. In contrast, I bond rates change every 6 months—and when inflation comes down, so too do I bond rates. That means there's no way to know what your I bond will earn in the future. A CD rate, however, is locked in for your entire term, no matter what happens with inflation—or what the Federal Reserve does to interest rates.
While it's true that cashing in any I bond that's less than five years old will trigger an early withdrawal penalty, the penalty is reasonably mild for most current I bond holders. So what you give up will likely be outweighed by both the gains from your new, higher rate and the added certainty of your future returns.
What Your Particular I Bond Is Paying Right Now
Every I bond's rate is pegged to the month the bond was issued. So purchasing an I bond on any day in, say, October 2022, would have the same Oct. 1, 2022 issue date. In this example, your first interest payment would be on Nov. 1, 2022, and you would receive six interest payments at your initial rate. After that, you'd receive six interest payments at the next rate (months 7–12), and so forth.
In the tables below, you can find your I bond purchase date to see not only what rates you have earned to date, but also what rate you will earn with your next interest payment on May 1.
You may have read in November that the next 6-month I bond rate had been announced. Though the headline rate was 5.27%, that only applies to I bonds issued between November 2023 and May 2024. The rate you're earning on I bonds issued before that is shown in the tables below.
Purchases Between November 2021 and April 2022
The first big wave of I bond purchasers occurred during this time period, after the U.S. Treasury announced an initial 6-month rate of 7.12%. If you were in this group, you were then further rewarded when the next 6-month rate was announced to be 9.62%.
But today, I bonds issued during these months are earning just 3.94%. And that rate will likely fall for the next 6-month period.
| Bond Purchase Month | Rate Earned Months 1–6 | Rate Earned Months 7–12 | Rate Earned Months 13–18 | Rate Earned Months 19–24 | Rate Earned Months 25–30 | Months Since Issue, on May 1 | Rate You'll Earn May 1 |
|---|---|---|---|---|---|---|---|
| Nov 2021 | 7.12% | 9.62% | 6.48% | 3.38% | 3.94% | 30 | 3.94% |
| Dec 2021 | 7.12% | 9.62% | 6.48% | 3.38% | 3.94% | 29 | 3.94% |
| Jan 2022 | 7.12% | 9.62% | 6.48% | 3.38% | 3.94% | 28 | 3.94% |
| Feb 2022 | 7.12% | 9.62% | 6.48% | 3.38% | 3.94% | 27 | 3.94% |
| Mar 2022 | 7.12% | 9.62% | 6.48% | 3.38% | 3.94% | 26 | 3.94% |
| Apr 2022 | 7.12% | 9.62% | 6.48% | 3.38% | 3.94% | 25 | 3.94% |
Have I bonds purchased earlier than November 2021? Every 6-month rate for all bond issue dates going back to 1998 can be found in the U.S. Treasury's I Bond Rate Chart.
Purchases Between May 2022 and October 2022
I bond purchases further took off after the Treasury's May 2022 rate announcement of 9.62%—the highest initial rate ever offered on an I bond. As a result, thousands of Americans snapped up I bonds during this period. Though the rate fell for the next 6-month period, the I bonds still offered an attractive return of 6.48%.
But like those who purchased six months earlier, the rate you'll earn on May 1 is now down to 3.94%, with another rate drop likely on the horizon.
| Bond Purchase Month | Rate Earned Months 1–6 | Rate Earned Months 7–12 | Rate Earned Months 13–18 | Rate Earned Months 19–24 | Months Since Issue, on May 1 | Rate You'll Earn May 1 |
|---|---|---|---|---|---|---|
| May 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 24 | 3.94% |
| Jun 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 23 | 3.94% |
| Jul 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 22 | 3.94% |
| Aug 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 21 | 3.94% |
| Sep 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 20 | 3.94% |
| Oct 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 19 | 3.94% |
Purchases Between November 2022 and April 2023
If you bought I bonds during this period, your initial rate was a lower 6.89%. But your current rate has still fallen considerably, down to 4.35%.
| Bond Purchase Month | Rate Earned Months 1-6 | Rate Earned Months 7-12 | Rate Earned Months 13-18 | Months Since Issue, on May 1 | Rate You'll Earn May 1 |
|---|---|---|---|---|---|
| Nov 2022 | 6.89% | 3.79% | 4.35% | 18 | 4.35% |
| Dec 2022 | 6.89% | 3.79% | 4.35% | 17 | 4.35% |
| Jan 2023 | 6.89% | 3.79% | 4.35% | 16 | 4.35% |
| Feb 2023 | 6.89% | 3.79% | 4.35% | 15 | 4.35% |
| Mar 2023 | 6.89% | 3.79% | 4.35% | 14 | 4.35% |
| Apr 2023 | 6.89% | 3.79% | 4.35% | 13 | 4.35% |
Bonds purchased more recently than the dates above may not be cashed in until they've reached their one-year anniversary date. So if, for instance, you bought an I bond anytime in the month of June 2023, you're not able to withdraw your funds until June 1, 2024.
I Bond Rates Are Heading Lower
The next I bond rate won't be officially announced by the Treasury until May 1. But given the publicly available formula for how the rate on existing bonds is determined, we're able to calculate what the next 6-month rate will likely be for all bonds already issued.
For those who bought between November 2021 and October 2022, your current rate of 3.94% is expected to drop to about 2.94% for the next six-month period. And for those with a current rate of 4.35%, you're likely to see your next rate fall by about a percentage point as well.
When you'll start earning that new rate will vary by the issue month of your bond. The table below shows you what month your next (lower) interest rate will kick in.
| Next Estimated Rate and Its Start Date for Existing I Bonds | |||
|---|---|---|---|
| Bond Purchase Month | May 1 Rate | Next 6-Month Rate | When New Rate Will Begin |
| Nov 2021 | 3.94% | 2.94% (est) | June 1, 2024 |
| Dec 2021 | 3.94% | 2.94% (est) | July 1, 2024 |
| Jan 2022 | 3.94% | 2.94% (est) | Aug. 1, 2024 |
| Feb 2022 | 3.94% | 2.94% (est) | Sept. 1, 2024 |
| Mar 2022 | 3.94% | 2.94% (est) | Oct. 1, 2024 |
| Apr 2022 | 3.94% | 2.94% (est) | Nov. 1, 2024 |
| May 2022 | 3.94% | 2.94% (est) | Dec. 1, 2024 |
| Jun 2022 | 3.94% | 2.94% (est) | Jan. 1, 2025 |
| Jul 2022 | 3.94% | 2.94% (est) | Feb. 1, 2025 |
| Aug 2022 | 3.94% | 2.94% (est) | March 1, 2025 |
| Sep 2022 | 3.94% | 2.94% (est) | April 1, 2025 |
| Oct 2022 | 3.94% | 2.94% (est) | May 1, 2025 |
| Nov 2022 | 4.35% | 3.35% (est) | June 1, 2025 |
| Dec 2022 | 4.35% | 3.35% (est) | July 1, 2025 |
| Jan 2023 | 4.35% | 3.35% (est) | Aug. 1, 2025 |
| Feb 2023 | 4.35% | 3.35% (est) | Sept. 1, 2025 |
| Mar 2023 | 4.35% | 3.35% (est) | Oct. 1, 2025 |
| Apr 2023 | 4.35% | 3.35% (est) | Nov. 1, 2025 |
Today's Best CDs Make It Easy to Out-Earn I Bonds
An I bond paying in the 2% to 4% range is no longer an especially competitive savings vehicle. Though it's possible I bond rates could rise in the future, the Federal Reserve's commitment to bringing inflation below the current level suggests I bond rates will fall further in 2024 and 2025, or at least plateau.
But you can benefit from some lucky timing right now, as certificate of deposit (CD) rates soared in 2023—and are still paying rates not far below their historic peak. Dozens of nationally available certificates are paying rates of 5% or more, with the nationwide leader offering as much as 5.60% APY. This means cashing out your I bonds and moving the money into a top-paying CD could instantly boost your interest rate by more than a percentage point now—and even more when your I bond rate moves lower.
How the I Bonds Penalty Works
I bonds cannot be cashed in for any reason during their first 12 months. But once you've reached your one-year anniversary, you can withdraw any time you like. It's true that if you haven't held the bond for at least five years, you'll incur a penalty equal to the last three months of interest. But with I bond rates now so much lower, the penalty hit isn't especially severe.
For example, an I bond purchased in July 2022 has been paying a rate of 3.94% for the last few months, so three months of 3.94% earnings would be forfeited. But your previous interest earnings, when the rate was 9.62% and 6.48%, aren't diminished.
Why You Should Always Redeem I Bonds on the First of the Month
Monthly I bond interest payments from the U.S. Treasury are always paid right away on the first day and not again until the first of the next month. So once you've collected interest for a particular calendar month, such as on the upcoming May 1, there's no reason or additional earnings to be gained by holding the funds any longer during May.
Additionally, if you're going to move your I bond funds elsewhere, withdrawing on May 1 allows you to receive the May interest payment and then as quickly as possible start earning interest on that money elsewhere, such as a CD or high-yield savings account. By moving quickly, you can collect May interest on your money in two different places.
Even if you simply want to cash out and use your I bond funds, there's no financial gain from waiting beyond the first of the month for your withdrawal.
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.
Banks must be available in at least 40 states. 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.
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.
TreasuryDirect. "I Bonds Interest Rates."
TreasuryDirect. "Series I Savings Bond Earnings Rates Effective May 1, 2023."
U.S. Treasury. "Questions and Answers About Series I Savings Bonds," Page 1.
U.S. Treasury. "Questions and Answers About Series I Savings Bonds," Page 3.
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