An Update on I-Bonds

An Update on I-Bonds

Many folks took advantage of the high interest rates offered by Series I Savings bonds last year.  If you are one of these we wanted to remind you of I-Bonds and when they mature so you can avoid potential penalties.

I bonds earn interest for 30 years.  That interest rate is a variable rate that depends on the reported inflation rates.   The current rate of interest for I bonds issues May 1, 2023 to October 31, 2023 is 4.3%.  The rates will change after the new inflation rate is set on November 1, 2023 and will update every 6 months.  The rates are set May 1 and November 1 each year.  This rate is down from the peak of May 1, 2022.

These bonds cannot be cashed in for one year after purchase.  If a bond is held for 5 years then it can be cashed in with no penalty.   If a bond is cashed in during years 2 through 5 then there is a penalty.  That penalty is the last 3 month of interest earned.

Therefore if you purchased a bond last year and are thinking of cashing it in for an alternative strategy it is important to understand what you may be losing in interest.  If you have any questions please do not hesitate to reach out to us.