Treasury Direct I Bond Rates: A Guide to Inflation-Protected Savings

I Bonds are a type of savings bond that protects your investment from inflation, offering a fixed interest rate and the potential for long-term growth.

The interest rate on I Bonds is adjusted semiannually, which means it's recalculated every six months. This rate is based on a combination of the Treasury's 5-year and 10-year inflation expectations.

The interest rate on I Bonds is made up of two components: the fixed rate and the inflation rate. The fixed rate is set when you buy the bond, while the inflation rate is adjusted semiannually based on the Treasury's inflation expectations.

You can earn interest on your I Bond as long as it remains in your possession, even after it reaches its maturity date.

I bonds are a type of savings bond designed to protect your investment from inflation.

The fixed interest rate of an I bond remains the same throughout its life, while the inflation rate adjusts twice a year in May and November based on the Consumer Price Index for All Urban Consumers (CPI-U).

The composite rate of an I bond combines its fixed rate and inflation rate, and is currently 3.11% until April 30, 2025.

You must hold an I bond for at least a year before you can cash it in, and there are interest rate penalties for cashing in before five years.

You can buy electronic I bonds in any amount up to $10,000 per calendar year, while paper I bonds have a maximum of $5,000 per year.

To invest in I bonds, you can buy them in increments of $50, $100, $200, $500, and $1,000 for paper bonds, or in any amount up to $10,000 for electronic bonds.

Interest on I bonds is compounded semiannually, meaning that every 6 months, the interest rate is applied to a new principal value, causing the bond's value to grow.

When deciding between I and EE savings bonds, it's essential to understand their key differences.

The main difference between I and EE bonds is their interest rate. I bonds adjust with the Consumer Price Index to protect you from inflation, whereas EE bonds offer a fixed rate of interest that promises to double the value of the bond if held for 20 years.

Both I and EE bonds have a minimum purchase requirement of $25 and can be purchased online or through a tax-preparer. You can buy up to $15,000 per year in I bonds and $10,000 per year in EE bonds.

I bonds have a 30-year maturity period and a current interest rate of 3.11%, while EE bonds have a 20-year maturity period and a current interest rate of 2.60%. Interest earned on both types of bonds is subject to federal income taxes.

Here's a summary of the key differences between I and EE savings bonds:

Ultimately, the choice between I and EE bonds depends on your individual financial goals and risk tolerance.

Investing in I bonds can earn you a decent return, but it's essential to understand how it works.

The composite rate of 3.11% applied to $10,000 in I bonds would earn a guaranteed $155.50 in interest over the next six months, but you can't cash in your bond until you've held it for a year.

Your rate is only guaranteed for six months, and after that, the rate can go up or down. The interest rate of TreasuryDirect Series I Savings Bond can change over time.

If you keep your money in the bond for five years, you can avoid losing the last three months of interest you earned, which would be about $79.

However, if you cash in your bond after one year, you'd net about $234 in interest, assuming the rates remain the same.

Investing in I bonds for 30 years would allow you to keep the total interest earned without any penalties, but there's no guarantee your rate would stay the same.

I bonds are a type of savings bond that earns interest monthly and compounds semiannually. You can buy them electronically through your TreasuryDirect account, but they're no longer available in paper form.

To earn interest, I bonds are tied to inflation, which means their rate can fluctuate. The fixed rate for I bonds issued between November 1, 2024, and April 30, 2025, is 1.20%.

You can cash in your I bond after 12 months, but if you do so before five years, you'll lose the last three months of interest. For example, if you cash in the bond after 18 months, you'll get the first 15 months of interest.

Here's a summary of I bond details:

The interest rate for I bonds is guaranteed for six months, but it can change after that. This means you won't know the exact interest rate for the entire 30-year term when you buy the bond.

To purchase Treasury Direct I bonds, you can start by visiting the TreasuryDirect website, which is a free and secure platform where you can view all your account information, including pending transactions.

The website allows you to buy electronic I bonds in any amount up to $10,000 each calendar year, with a minimum purchase amount of $25. You can also give I bonds as a gift.

If you prefer to buy I bonds in person, you can purchase paper I bonds at tax time with your refund, but only in increments of $50. You don't need to put your entire refund in bonds - you can earmark just part of it.

To summarize the purchase options, here's a breakdown:

You can't resell I bonds, and you must cash them out directly with the U.S. government. Only U.S. citizens, residents, and employees can purchase these bonds.

I bonds are sold at face value, with no fees or sales tax added to the purchase price. This means you get the full value of your investment right from the start.

The minimum investment required to purchase an I bond is $25, and the maximum digital investment per person, per year is $10,000.

You'll earn interest on your I bond, which is compounded twice a year. This means your interest is applied to your principal balance, earning you even more interest over time.

Here are the key characteristics of I bonds:

One thing to keep in mind is that you can't cash in an I bond for at least one year after purchase, and if you do, you'll lose some interest payments.

The I bond rate drop on May 1 might have you wondering what's going on. The rate dropped 2.5 percentage points.

I bonds are tied to inflation, which is still high, but it's not as high as it was six months ago. Inflation has actually been declining for nine straight months on an annual basis.

You won't lose money if the interest rate goes down, but you won't earn as much either. This is because the variable rate on I bonds reflects the increase of inflation over the last six months.

The current interest rate for I bonds is 1.20% for bonds issued between November 1, 2024, and April 30, 2025.

I bonds are sold at face value, meaning you won't pay any fees or sales tax.

The minimum investment for an I bond is $25, and the maximum digital investment is $10,000 per person, per year.

I bonds earn interest monthly, which is compounded twice a year.

You'll lose three months of interest payments if you cash in a bond one to five years after purchase.

The value of your I bond will never drop below what you paid for it.

You can't cash in an I bond for at least one year, and you'll lose interest if you cash out early.

Here are the details on cashing in your I bond:

I bond interest is exempt from state and municipal taxes, but you'll still need to pay federal income tax on the bond each year or defer tax until redemption.

To qualify for tax-free education costs, your adjusted gross income needs to be under $83,200 for a single filer, or $124,800 for couples.