I-Bond Rate Is 6.73%

I made the right move with the I-Bond for my niece. The Treasury Department announced today that the I-Bond rate from November to April will be 6.73%. This rate includes a fixed rate of 1.0% (this is down from 1.2% over the last six months) and an inflation adjusted rate of 5.73%. Even though the fixed rate of the bond was lowered, the rate still is well above what ING (3.4%) and Emigrant Direct (4.0%) are paying.

I bought the I-Bond with the thought that the fixed rate would most likely be lower than the fixed rate for the last six months. I just couldn’t see the Treasury Department offering a 7%+ return which proved to be correct. This should help her savings out a bit since that money would have been earning virtually nothing in a Japanese bank.

If you haven’t purchased an I-Bond yet, but are considering doing so, you still have some time to think about it since the best time to do so is toward the end of November — this will allow you to earn interest in your regular banking account all through November + interest for the I-Bond for all of November (the I-Bond pays a full month7s interest no matter when during the month it’s purchased).

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3 Responses to I-Bond Rate Is 6.73%

  1. SMB says:

    Dumb question: You bought it in October, when the interest rate was 4.80%. (I bought in October too.) I thought I read on their site that the rate will be 4.80% for six months, and THEN it would jump to the new rate. Did I misunderstand? Does it now seem that it would have been better to wait until November to buy an I-Bond? I just looked at my account info on treasurydirect.gov, and it’s showing 4.80%.

  2. pfadvice says:

    You made the right move by buying in October. Yes, your rate will be 4.80% for the next 6 months and then will be 6.73% for 6 months, but the important number is the fixed rate. The higher the fixed rate, the better. Since the fixed rate went down in this last update (from 1.2% to 1.00%), you were better off purchasing in October. When the next update comes in 6 months, you will get whatever the infaltion rate is + 1.2% (since the base always stays the same) instead of 1.0% if you had purchased this month.

  3. SMB says:

    I think I understand now. I usually make sure I understand completely what I’m investing in before I jump in, but this sounded too exciting (and it was only $400). Thanks!

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