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US Treasury Series I Savings Bonds Inflation Rate Earnings (November '22 - April '23) - 6.89% Annualized for 6 months
U.S. Government Treasury is offering 6.89% Interest Rate (Annualized for 6 Months) in combined Fixed + Inflation Rate Earnings valid on newly issued Series I Savings Bonds purchased from November 2022 through April 2023. Limit of $10,000/year per person (with caveats, see prior thread for details in the discussion).
In layman's terms: These are U.S. treasury securities which adjust their interest rate every 6 months based on the current inflation rate. The calculation is more complex than that but using the CPI-U (Core CPI) from October of 6.6% YoY, an inflation interest rate of 6.47% can be derived based on the previous 6 months of inflation data, and when combined with a fixed interest rate component over which the Fed has discretion and was announced November 1, we now have the finalized rate of 6.89%.
For further details on how I-bonds work, see the previous Front Page deal when the 9.62% rate was announced. There is plenty of discussion and information there on how I-bonds work.
About this offer:
What is a Series I bond? (source)
https://www.treasurydir
In layman's terms: These are U.S. treasury securities which adjust their interest rate every 6 months based on the current inflation rate. The calculation is more complex than that but using the CPI-U (Core CPI) from October of 6.6% YoY, an inflation interest rate of 6.47% can be derived based on the previous 6 months of inflation data, and when combined with a fixed interest rate component over which the Fed has discretion and was announced November 1, we now have the finalized rate of 6.89%.
For further details on how I-bonds work, see the previous Front Page deal when the 9.62% rate was announced. There is plenty of discussion and information there on how I-bonds work.
About this offer:
What is a Series I bond? (source)
- "A savings bond that earns interest based on combining a fixed rate and an inflation rate."
- You may use Series I bonds to:
- Save in a low-risk product that helps protect your savings from inflation
- Supplement your retirement income
- Give as a gift
- Pay for education
- Click here for more information about Series I Bonds
- A combination of a fixed rate that stays the same for the life of the bond and an inflation rate that is set twice a year.
- An I bond earns interest monthly from the first day of the month in the issue date. The interest accrues (is added to the bond) until the bond reaches 30 years or you cash the bond, whichever comes first.
- The interest is compounded semiannually. Every six months from the bond's issue date, interest the bond earned in the six previous months is added to the bond's principal value, creating a new principal value. Interest is then earned on the new principal.
- The composite rate for I bonds issued from May 2022 through October 2022 is 9.62 percent. This rate applies for the first six months you own the bond.
- After they are 12 months old.
- If you cash an I bond before it is five years old, you will lose the last three months of interest.
- I bonds earn interest for 30 years if you don't cash the bonds before they mature.
- If you've been affected by a disaster, special provisions may apply.
https://www.treasurydir
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Community Wiki
Last Edited by superslickz
May 1, 2023
at
05:46 PM
This post can be edited by most users to provide up-to-date information about developments of this thread based on user responses, and user findings. Feel free to add, change or remove information shown here as it becomes available. This includes new coupons, rebates, ideas, thread summary, and similar items.
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Let's keep this updated:
Current rate is 4.30% May 1, 2023 to October 31, 2023.
Once a Thread Wiki is added to a thread, "Create Wiki" button will disappear. If you would like to learn more about Thread Wiki feature, click here.
Let's keep this updated:
Current rate is 4.30% May 1, 2023 to October 31, 2023.
152 Comments
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Thanks for the info that you can add/change over phone. But do you have to reel out the account number over the phone? Hopefully that gets recorded properly.
Is there something special I need to do or is there some other stuff that I missed out?
Thanks
Is there something special I need to do or is there some other stuff that I missed out?
Thanks
I called their support number and surprisingly my wait time was less than half hour. She said you can do that online. I said no I can't. She directed me as if I was a novice. I went to the page to add the bank account... lo and behold, when I click add it asks me one of the secret question. On answering that correctly, I gotten redirected to the form to add the bank details. In less than two minutes, I was able to add.
So, if any of you have been trying to add a bank account and facing difficulties, please try again. You might be surprised.
Anyone know how the current value is calculated? I can't find any kind of statement or calculation on the TD website.
I bought $10K in early May at the 9.62% rate. Account currently shows $10,320 value, and has been that way for a few weeks. Seems like the interest earned on that first 6 months should have been about 50% higher.
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Year 2022 (No taxable transactions)
....and so on.
Didn't realize you pay tax on all interest the year of cashing out. No way to pay tax on a yearly basis, correct?
Edit: All info is on https://www.treasurydir
Year 2022 (No taxable transactions)
....and so on.
Didn't realize you pay tax on all interest the year of cashing out. No way to pay tax on a yearly basis, correct?
Edit: All info is on https://www.treasurydir
I've tracked this since last year but that long lock-out period is deterring me from putting money in. It's only 10k max per year but still. I think 4% in a more liquid savings account that has features like vaults is quite competitive vs ~7% in a long term bond like this. Keep in mind it could adjust down based on inflation (which is expected to trend down).
I've tracked this since last year but that long lock-out period is deterring me from putting money in. It's only 10k max per year but still. I think 4% in a more liquid savings account that has features like vaults is quite competitive vs ~7% in a long term bond like this. Keep in mind it could adjust down based on inflation (which is expected to trend down).
At any rate, nothing else has come close to 7 or 9%, short term rates are still under 5%, and the near-term outllook for rate increases may be only so-so, so I'm going to at least ride it for awhile just to see. The i-Bonds have run well ahead of the alternatives for going on 18 months now. It seems clear that's what you'd expect when inflation starts trending up, and it would have been smart to get in way earlier that I did. Wish I had been paying attention to this stuff over the years, I really have no idea of its history compared to normal bonds.
In a market where rates are turning down, you might do better to extend maturity out a bit, and buy low-coupon bonds (lower price), hoping that the return gets goosed and accelerated a bit by coming in as early capital gains. Now that short term rates are almost 5% and may go a bit higher, the differential to the i-Bonds isn't great, and betting that you'll do as well or better in T-Notes over a 2 or 3 year span or more, given that i-Bond yields will start dropping once inflation turns down. I guess it all depends where you think inflation is going.
It's a drag that you can only put $10K per year into it. With the lockup, it's not good for money you might want back over the next year or two.
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They have very specific guidelines in how they judge inflation each month, which is then put into a formula to determine the next 6 month interest rate. It's not like they just stick their finger into the wind and make a guess.
I think the problem a lot of people have is that they don't understand what inflation means and how it works. If you're hope is that ibond rates will continue to be super high until prices go back down to what they were 3 years ago, I'm afraid to break the news to you but that isn't how it works. And that's almost certainly not going to happen. The rate is based on how much prices have gone up in the past six months, which has been significantly less than in prior windows. That's a good thing.