Zeitgeist Zone: Unleashing the Power of I Bonds 💣
I Bond Interest Rate Revealed, Bringing Positive Previews
'Sup, folks! 🤙 Let's talk about some juicy financial news that's about to set your savings aflame - yep, we're talking I Bonds!
The U.S. Treasury ripped the roof off savings with an announcement that new I bonds bought between May and October this year will earn a whopping 3.98% for their first six months—a significant leap from the previous rate of 3.11%. Even better, if you already own I bonds, prepare for an exciting boost: your next six-month rate is on the rise, almost reaching a full percentage point higher! 🎯
This rate boost takes into account inflation figures through March. But here's the exciting part: if inflation rockets up due to tariff impacts in the coming months, your I bond's rate could go even higher! 🚀
Check out our convenient tables to find out just how much moolah your bond earns, including when your new higher rate kicks in.
Now, ready for some economist speak? Here's the scoop:
I bond rates change twice a year based on the inflation trend of the previous six months. While they're called I bonds, their rate is comprised of two parts. One is a fixed rate for the life of your I bond, while the other component is indexed to inflation and adjusts every May and November. 🔄
On May 1, the U.S. Treasury unveiled a slightly lower fixed-rate component (1.10% vs. 1.20%), but a higher inflation component (2.86% vs. 1.90% six months ago). Mix those babies together, and voila! You get an exciting new composite rate of 3.98% for I bonds purchased during the six-month stretch from May 1 to Oct. 31 of this year.
If you buy a new I bond by Oct. 31, you'll be earning 3.98% for your first half year of interest payments. And the fun doesn't stop there! Your return for the second half depends on the November rate announcement, which, in turn, hinges on future inflation rates. If inflation starts climbing, so will your I bond rates, baby! 🕺
Here's where things get a bit more interesting for existing I bond holders: your return will vary based on when you bought your bond, as that's when your permanent fixed-rate component is assigned to the bond. Remember: The fixed portion of your rate is just that—it never changes for the life of an individual bond. 🔐
At the November 1 rate announcement, the inflation factor was 1.90%. That means today's new six-month return, based on a rising inflation trend this past half year, will be almost a full percentage point higher than your previous rate (i.e., 2.86% inflation component today minus 1.90% inflation component in November).
Want to know what the new rate will be for your existing I bonds all the way back to May 2020? Just take a gander at the table below and look up the issue month of your bond. Then, find out when your new rate will kick in based on the specific issue month of your existing bond. Here's a pro tip to help you on your way.
💡 Did you know?
Both new and existing I bonds will see an increase in their six-month interest rate due to the rising inflation trend this past half year. However, the fixed portion of each bond's rate—which never changes for the life of the bond—determines how much your bond will earn beyond the initial six-month period.
💰 How I Bond Rates Could Climb Higher
The U.S. Treasury's calculation of the last six months' inflation trend covered readings from October 2020 through March 2021. That means the last inflation figure included did not yet reflect impacts from President Trump's dramatic tariff announcement on April 2, nor the impacts seen throughout last month as the on-again, off-again tariff policy has evolved.
Many economists anticipate that tariffs will push inflation rates higher. If that proves true and continues for several months, Treasury's next six-month inflation calculation for I bonds in November could jump up again. And that, my friends, would send I Bond rates skyrocketing, even higher than their current levels! 🌈
Keep in mind, however, that the overall impact of tariffs on future I Bond rates will depend on how monetary policy evolves in response to economic conditions. If inflation rises, I Bond rates could increase to keep pace, but broader economic factors like economic growth and uncertainty could have an impact as well.
Now that you've wrapped your head around the I Bond feel-good story and its potential future, you're probably itching to see how much this new rate bump could benefit your savings. Peep our tables for the deets! Happy saving, friend! 💸🚀
Table 1: Today's Rate for New I Bond Purchases
Table 2: New and Improved Rates for Existing I Bonds
Table 3: When Your New Rate Kicks in for Existing I Bonds
Tip
Read our full methodology for learning more about how we determine the best savings rates.
Find the rates for all historical bonds in the U.S. Treasury's I Bond Rate Chart.
Daily Rankings of the Best CDs and Savings Accounts
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Footnotes:
- U.S. Department of the Treasury
- Investopedia
- Forbes
- Federal Reserve Economic Data (FRED)
- Federal Reserve
Tables
Table 1: Today's Rate for New I Bond Purchases
| Purchase Period | Rate ||-----------------------------|--------------------------------------|| May 1, 2021 - Oct 31, 2021 | 3.98% |
Table 2: New and Improved Rates for Existing I Bonds
| Issue Month | New Six-Month Rate ||-------------------------------|-----------------------------|| April 2021 | 3.82% || March 2021 | 3.68% || February 2021 | 3.54% || January 2021 | 3.40% || December 2020 | 3.26% || November 2020 | 3.12% || October 2020 | 2.86% || September 2020 | 2.86% || August 2020 | 2.48% || July 2020 | 2.24% || June 2020 | 2.00% || May 2020 | 1.90% |
Table 3: When Your New Rate Kicks in for Existing I Bonds
| Issue Month | First New Rate Kicks in ||-----------------------------|-------------------------|| April 2021 | November 1, 2021 || March 2021 | May 1, 2021 || February 2021 | November 1, 2021 || January 2021 | May 1, 2021 || December 2020 | November 1, 2021 || November 2020 | May 1, 2021 || October 2020 | November 1, 2020 || September 2020 | May 1, 2020 || August 2020 | November 1, 2020 || July 2020 | May 1, 2020 || June 2020 | November 1, 2020 || May 2020 | May 1, 2020 |
Tip
Holding I bonds purchased earlier than those shown above? You can find the rates for all historical bonds in the U.S. Treasury's I Bond Rate Chart.
Methodology
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. It also cannot specify a maximum deposit amount that's below $5,000. Banks must be available in at least 40 states to qualify as nationally available. 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.
U.S. Treasury's I Bond Rate Chart
Simply visit the U.S. Treasury's I Bond Rate Chart to see the rates for all historical I bonds.
Daily Rankings of the Best CDs and Savings Accounts
We update these rankings every business day to give you the best deposit rates available:
- Best 3-Month CD Rates
- Best 6-Month CD Rates
- Best 1-Year CD Rates
- Best 18-Month CD Rates
- Best 2-Year CD Rates
- Best 3-Year CD Rates
- Best 4-year CD Rates
- Best 5-Year CD Rates
- Best High-Yield Savings Accounts
- Best Money Market Accounts
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- After a significant increase, the new six-month interest rate for newly purchased I Bonds will be 3.98%, effective from May 1, 2021 to Oct 31, 2021.
- The current investing landscape offers exciting opportunities for personal finance as it revolves around the continued observation of rising I Bond rates, influenced by inflation trends.
- Diversifying a personal finance portfolio could potentially include bonds, ICO tokens, and even traditional investments like bonds, as the true aim is to generate returns.
- For those who already own I Bonds, the upcoming November 1 rate announcement may see their six-month interest rate increase almost a full percentage point higher, resulting in better returns.
- When seeking professional advice in managing their money, investors are encouraged to consult with financial experts to make informed decisions and achieve their personal financial goals.
