Series I bond rate is 4.03% through April 2026
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The US Treasury Department announced new rates for Series I bonds.
Newly purchased I bonds will pay interest at 4.03% per annum from November 1 through April 30; This rate is higher than the 3.98% yield offered on October 31.
new rate contains a variable part 3.12%, A fixed portion based on inflation data 0.90%. According to the Undersecretariat of Treasury, the combined rate after rounding is 4.03%. Fixed interest rate decreased from 1.10 percent It was announced in May.
In May 2022, bond yields hit a record high of 9.62%, and many investors flocked to the government-backed, virtually risk-free asset.
Since then, some short-term investors have bought back their assets due to falling inflation and rates. But other long-term investors have purchased I bonds over the past few years to lock in the higher fixed rate.
How do bond rates work?
bond rates variable and fixed partThe Treasury adjusts it every six months, in May and November. The compound return is known as “compound interest” paid to investors over a six-month period.
The variable rate is based on inflation and will remain the same for six months from your purchase date, regardless of the Treasury’s next adjustment.
Meanwhile, the fixed rate remains the same for the life of your I bond after purchase. The fixed portion may be more difficult to estimate and the Treasury does not explain how it calculates this change.
How does the change affect existing I bond investors?
If you already have I bonds, there is a six-month timeline for rate changes and this varies depending on your original purchase date.
After the first six months, the variable return changes to the next announced rate. However, the fixed rate remains the same throughout your entire holding.
For example, let’s say you purchased bond I in March. Your variable interest rate will be 1.90% and will shift to 2.86% in September. Your fixed interest rate remains at 1.2%. At this point your new compounding rate will be 4.06%.
If you redeem assets before then, you can earn bond interest for up to 30 years or less. However, you cannot convert I bonds into cash for at least one year from the date of purchase. If you use it within five years, you will lose your last three months of interest.
