Purchase I Bonds And Get 4.26% Interest For 6 Months

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Update, 5/1/26: I Bonds now have a combined rate of 4.26% (3.34% variable rate plus a 0.9% fixed rate). That’s higher than has been offered since 2024.

Update, 5/1/23: I Bonds now have a 3.38% variable rate plus a 0.9% fixed rate.

Update, 4/20/23: I Bonds are expected to drop to a rate around 3.38% plus a potential fixed rate on May 1st that might range from 0.3-0.9%, though the exact rate won’t be announced until then. The drop is due to the US inflation rate falling from around 9% to 5%. The fixed rate of an I Bond applies on top of the variable inflation rate, for the life of the I bond.

You can lock in 6 months of 6.89% interest by buying I Bonds now. They would then earn a likely rate of 0.4% fixed rate plus 3.38% interest rate for the following 6 months. However I Bonds must be held for at least 1 year and there is a penalty of the last 3 months of interest earned if they’re closed before 5 years. You may be better off with other investment options at this point in time.

If you do want to close out your I Bonds positions, consider that you will be charged the last 3 months interest, so you may want to wait until I Bond interest rates drop and then wait 3 months after the rate on your I Bonds drop until you cash them out . Interest rate drops will vary based on when you purchased the bonds, as there is a 6 month rolling interest rate period from the month when they are purchased. Either way, we’ll know more on May 1st, so check back then for the new rate.

Will you lock in I Bonds at the current 6.89% rate or will you invest in other high yield options that are now available?

Update, 12/28/22: If you haven’t yet maxed out your 2022 I Bonds purchases, you should be able to do so until tomorrow.

Update, 11/1/22: Newly purchased I bonds from now through 4/30/23 will receive an effective 6.89% interest rate, which is a composite of a 0.4% fixed rate and a 6.48% inflation rate. The fixed rate has been 0% since May 2020. That 0.4% fixed rate will apply on top of the variable inflation rate, for the life of the I bond.

Update, 10/28/22: The Treasury site has been slammed all week, but if you’re persistent and act now, you can still lock in this rate. I just bought gift bonds (as explained in the update below) for my wife and I for 2023 and 2024 to lock in the current rate!

Update, 10/24/22: If you purchase I Bonds by Friday you will receive whopping 9.62% interest rate as if you had them for the full month of October with a 10/1/22 issue date and your next rate change will be on 4/1/23. The interest rate for the following 6 months is expected to be 6.47%. See the original post below for purchase instructions.

You can buy up to $10,000 in I Bonds per person or company per calendar year. You can also lock in current rates by purchasing gift bonds. For example, spouses can buy each other multiple gift bonds now which start accruing interest at today’s high rates and can be gifted and applied to each others account in future years. Note that when you receive the gift in future years, it counts against the $10,000 per person limit for the recipient in the year in which it was received and applied. The limit applies to how much is delivered in the same calendar year. The holding period begins from the beginning of the month that they’re purchased. That means that gifts bought now can be cashed out on 10/1/23 with a 3 month interest penalty or on 10/1/27 with no interest penalty, regardless of the year in which they are actually delivered to the recipient. The interest penalty is based on the most recent 3 months, so if interest rates drop, the penalty will be smaller. Note that you can’t gift to or from a business.

Update, 4/29/22: Purchases made today will have a 5/1/22 issue date, earning 9.62% interest for 6 months. The interest rate for the following 6 months will be determined in October.

Update, 4/28/22: Today is the final day to lock in 6 months of 7.12% interest and 6 months of 9.62% interest for you, your spouse, your business, your kids, your trusts, or gifts for future years for any of those!

Update, 4/26/22: If you purchase I Bonds by Thursday you will receive the 7.12% interest rate as if you had them for the full month of April with a 4/1/22 issue date and your next rate change will be on 10/1/22. You will then receive a whopping 9.62% interest from 10/1/22-3/31/23. 

Update, 1/28/22: If you purchase I Bonds today you will receive the 7.12% interest rate as if you had them for the full month of January and the next rate change will be on 7/1/22. Bonds purchased today will have a purchase date of 1/31/22 and a 1/1/22 issue date. You can buy up to $10,000 in I Bonds per person or company per calendar year. I bought in December and am buying more now!

Update, 12/30/21: The Series I Bonds that I bought last night have now posted to my account with an 12/1/21 issue date. That means on 1/1/22 I’ll receive the 7.12% interest rate as if I had them for the full month of December and the next rate change will be on 6/1/22.

If you want to buy 12/1/21 issue date bonds you’ll want to do so today before 11:59pm ET. You can buy 2022 bonds starting on 1/1/22.

Originally posted on 12/29/21:

US Treasury Series I Savings Bonds, or I Bonds are US government bonds that keep pace with inflation. The value of I Bonds will never go down and is backed by the treasury. The inflation rate gets updated every May and November, so the rate until May 2022 is an unusually high 7.12% due to the rampant inflation in the US in 2021!

The previous rate from May through November 2021 was 3.54%.

If you purchase I Bonds the current interest rate will be locked in for a full 6 months from your date of purchase, and will update every 6 months thereafter based on the current rate.

You can’t cash out an I Bond within 1 year of purchase. If you cash them out between 1 and 5 years after purchase, you will pay a relatively low penalty of the previous 3 months interest. If interest rates drop, just wait 3 months and your penalty will be much lower than if you cash out during a high interest period. After 5 years you can cash them out without penalty and you can hold onto them for up to 30 years with interest that is pegged to the current inflation rate.

Interest is paid on the 1st of every month and you get interest for the entire month in which you buy them. The interest will be rolled into and reinvested into the value of your I Bonds until you cash them out. Unlike a CD, you won’t owe taxes on the interest until you cash it out. You also won’t owe state or local taxes on the interest. If you qualify based on income and use them for qualified higher education you may pay no federal taxes as well.

Note that if your bonds are within 5 years of the issue date, the current value excludes all interest earned in the past three months. If you cash out today, you’ll receive the current value, which is why you won’t see any interest added to the current value during the first four months. After 5 years there is no cash out penalty, so the current value will reflect the full value with no penalty.

You can buy up to $10,000 in I Bonds per person/social security number, per calendar year. That means you can buy $10,000 per person now and another $10,000 per person starting on 1/1/22.

You can also buy up to $10,000 in I Bonds for each business that you have, per calendar year.

You can also buy an additional $5,000 in I Bonds per calendar with the proceeds from your tax return refund. And you can buy $10,000 in I Bonds for a trust.

To buy I Bonds, you need to open a TreasuryDirect account here. When making a password, note that it will not be case sensitive, and you won’t be able to use autofill or paste it. What did you expect from a government site? 😀

After creating an account you’ll get an email with an account number. You’ll need that to login and purchase the I Bonds here. You can then fund your account via ACH from your bank account. Click on BuyDirect and then on Series I savings Bonds. Make sure that you have sufficient funds or else your account will be locked. Note that this bank account can be difficult to change, so try to use one that you will have for the long term.

You can find more information on I Bonds here and FAQs here.

The Finance Buff has more information and screenshots of the process, so you can read his articles for more info on I Bonds, buying I Bonds for kids, buying I bonds as a gift, buying I Bonds for a business, buying I Bonds for a Trust, overpaying taxes to buy more I Bonds, and converting tax refund paper I Bonds to online I Bonds.

Do you have I Bonds or will you buy I Bonds at this rate?