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The U.S. Treasury Department announced on Tuesday that the Series I bonds will pay an annual interest rate of 4.28% from May 1, 2024, to October 2024.
Indexed to inflation, the latest I-bond rate is lower than the 5.27% annual rate offered since November and slightly lower than the 4.3% rate since May 2023.
Current I-bond owners will also see their interest rates adjust, depending on when they purchased the asset.Have a six-month timetable Interest rate changesstarting from the original purchase date.
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Ken Tumin, founder of DepositAccounts.com, said that despite falling interest rates, the fixed-rate portion of Class I bonds remains “very attractive” to long-term investors. track these assets.
How does my bond interest rate work?
I The bond interest rate is divided into two parts – a variable rate part and a fixed rate part – and the Treasury Department adjusts both parts every May and November.The history of two interest rates here.
Subject to inflation, the variable rate remains the same for six months after purchase, regardless of when the Treasury announces a new rate.
After the first six months, the variable rate of return will change to the next published rate.For example, if you purchased an I Bond in September of any year, your Rate changes March 1 and September 1 of each year, according to the Treasury Department.
In contrast, fixed rates, which are unpredictable, stay the same after purchase. In May and November each year, the Treasury can adjust or keep the fixed interest rate unchanged.
Still ‘great’ for long-term investors
millions of investors A flood of money poured into I bonds after annual interest rates hit a record 9.62% in May 2022, and rates have since fallen as inflation cooled.
Currently, short-term savers have better cash options. But Jeremy Keil, a certified financial planner at Keil Financial Partners in Milwaukee, said I bonds may still appeal to long-term investors.
“The only reason to buy Class I bonds is the fixed interest rate,” which was 1.3% for new bonds purchased between May 1 and October, he said.
Long-term savers may also like the tax benefits, Toomin said. There are no state or local taxes on interest, and you can defer federal taxes until redemption.
“This is great for holding an emergency fund for the long term,” Kyle adds.
Of course, you need to consider your goals and timeline before purchasing. One of the disadvantages of I bonds is that you won’t have access to the funds for at least a year, and you’ll be hit with a three-month interest penalty if you use the funds within five years.
You can purchase I Bonds online through TreasuryDirect, with an individual limit of $10,000 per calendar year. However, you can purchase more bonds in a variety of ways, including purchasing a $5,000 Paper I Bond through a federal tax refund.
Frequently Asked Questions about I Bonds
1. What is the interest rate from May 1 to October 31, 2024? 4.28% per year.
2. How soon will I receive 4.28%? Six months after purchase.
3. When is the deadline to earn 4.28% interest? The bonds must be issued by October 31, 2024.
4. What is the purchase limit? $10,000 per person per calendar year, plus an additional $5,000 in Paper I Bonds through federal tax refunds.
5. Do I need to pay income tax? You must pay federal income tax on the interest you earn, but no state or local taxes.
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