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New Series I Bond Rates Announced: What You Need to Know

The U.S. Department of the Treasury has unveiled new Series I bond rates, effective from November 1, 2024, to April 30, 2025. These bonds, linked to inflation, will offer an annual interest rate of 3.11%, comprising a variable portion of 1.90% and a fixed portion of 1.20%. While this rate is lower than the previous 4.28% yield, experts believe the fixed-rate portion still holds appeal for long-term investors.

Understanding I Bond Rates

I bond rates consist of two components: a variable rate, which adjusts every six months based on inflation, and a fixed rate, which remains unchanged after purchase. The Treasury Department updates these rates every May and November, affecting the I bond “composite rate.” You can explore the history of both rate components here.

How Rate Changes Affect Existing I Bond Holders

If you already own I bonds, you’ll experience a six-month timeline for rate changes, depending on your original purchase date. After the initial six months, the variable yield shifts to the next announced rate. For instance, if you purchased I bonds in September 2024, your rates would change every year on March 1 and September 1, according to the Treasury.

Example: How Rate Changes Impact Your I Bond

Let’s say you bought I bonds in September 2024. Your variable rate would initially be 2.96% and then change to the new rate of 1.90% in March 2025. Meanwhile, your fixed rate would remain at 1.30%. This would bring your new composite rate to 3.2%.

Key Takeaways

• The new Series I bond rate is 3.11%, comprising a 1.90% variable portion and a 1.20% fixed portion.
• The fixed-rate portion still appeals to long-term investors, despite the overall rate decrease.
• Existing I bond holders will experience rate changes based on their original purchase date.
• Understanding how I bond rates work can help you make informed investment decisions.

By grasping the intricacies of I bond rates, you can make the most of this investment opportunity and achieve your long-term financial goals.