I-Bond Update — and Advice
By Terry Savage on February 01, 2025
The new rate for Series I bonds purchased after Nov 1, 2024 is 3.11%. That includes a new higher base rate of 1.2%, which will stay with the bond for its entire lifetime. Future inflation adjustments to these bonds will be made on top of that 1/3% fixed base rate. The rate will change again on May 1, 2025.
Series I bonds purchased two years ago have NO base rate! So your old bond (purchased back when rates were over 9%) is yielding only 1.9% for this 6-month period. That 1.9% is the current inflation adjustment portion of the I-bond.
I bonds purchased between 11/22 and 05/23 carry a base rate of 0.4%, to which you add the current 1.9% adjustment to get your yield.
I-bonds purchased between 05/23 and 11/23 carry a fixed base rate of 0.9%, to which you add the current 1.9% adjustment to get your yield.
Bonds purchased between 11/23 and 05/24 carry a fixed base rate of 1.3%.
Given the huge difference, it might make sense to sell those older bonds that do not have a “base rate” and instead purchase either new Series bonds — or even Treasury bills. Taking that action will incur a 3 month’s loss of interest as described below.
Remember, you must hold I-bonds for at least one year, and will be penalized 3 month’s loss of interest if you cash them in before 5 years. But with rates having dropped so much, and because they penalize the most recent 3 months interest, this might be a good time to make the switch.