Series I bonds will be paying 4.28% annual interest from May 1 through October 2024, according to the U.S. Department of the Treasury. This rate is a decrease from the previous 5.27% rate since November and slightly lower than the 4.3% rate from May 2023. Current I bond owners will also see adjustments in their rates, based on when they purchased the assets. A six-month timeline for rate changes begins on the original purchase date.
The I bond rates consist of two parts – a variable and fixed rate portion – which are adjusted by the Treasury every May and November. The variable rate stays the same for the first six months after purchase, regardless of when new rates are announced. After the initial six months, the variable yield will change to the next announced rate. On the other hand, the fixed rate remains constant after purchase, with the Treasury making adjustments to it or keeping it the same every May and November.
Despite falling rates, the fixed rate portion of the I bond remains attractive for long-term investors. While short-term savers may have better options for cash, long-term investors may find I bonds appealing. The tax benefits, such as no state or local taxes on interest and the ability to defer federal taxes until redemption, make them particularly attractive for long-term saving. However, it’s important to consider your goals and timelines before purchasing as I bonds have restrictions on accessing funds for at least a year and a three-month interest penalty if funds are withdrawn within five years.
I bonds have become popular among investors after the annual rate reached a record 9.62% in May 2022, attracting millions of investors. Currently, the fixed rate for new purchases from May 1 through October is 1.3%, making it an attractive option for long-term investors. You can purchase I bonds online through TreasuryDirect, with an annual limit of $10,000 per person, with additional ways to purchase more through paper bonds via a federal tax refund.
Frequently asked questions about I bonds include the interest rate from May 1 to Oct. 31, 2024 (4.28% annually), the duration of receiving the rate (six months after purchase), the deadline for getting the interest rate (bonds must be issued by Oct. 31, 2024, with a potential earlier purchase deadline), purchase limits ($10,000 per person per calendar year, with an additional $5,000 available through paper bonds via a federal tax refund), and the tax implications (federal income taxes on interest earned, but no state or local taxes).
