Personal finance

Series I bonds are ‘still a good deal’ despite an expected falling rate in May, experts say

Jetcityimage | Istock | Getty Images

The annual rate for Series I bonds could fall below 5% in May based on the latest inflation data and other factors, experts predict.  

That would be lower than the current 5.27% interest on I bond purchases made before May 1, but higher than the 4.3% interest offered on new I bonds bought between May 1, 2023, and Oct. 31, 2023.    

Despite the expected rate decline, I bonds are “still a good deal” for long-term investors, according to Ken Tumin, founder and editor of, which closely tracks these assets.  

More from Personal Finance:
What you can learn from the Biden, Harris 2023 tax returns
Biden releases formal proposal for new student loan forgiveness plan
Why a $100,000 income no longer buys the American Dream

Meanwhile, short-term investors currently have higher-yield options, such as Treasury bills, money market funds or some certificates of deposit.

Backed by the U.S. government, demand has soared for I bonds amid higher inflation, particularly after the annual rate hit 9.62% in May 2022. Next month, the rate could drop to around 4.27%, some experts predict. 

How the I bond rate works

The U.S. Department of the Treasury adjusts I bond rates every May and November. That yield changes based on a variable and fixed portion.

The Treasury adjusts the variable part every six months based on the consumer price index, which is a key measure of inflation. The agency can change the fixed portion or keep it the same.

The fixed portion of the I bond rate stays the same for investors after purchase. The variable rate portion resets every six months starting on the investor’s I bond purchase date, not when the Treasury Department announces rate adjustments. You can find each rate by purchase date here.

Currently, the variable rate is 3.94% and the fixed rate is 1.3%, for a combined rounded yield of 5.27% for I bonds purchased between Nov. 1 and April 30.

The 1.3% fixed rate “makes it very attractive” for investors who want to preserve purchasing power long term, according to Tumin.

How the fixed rate could change

Since the variable rate for I bonds is based on six months of inflation data, experts agree it will fall from 3.94% to 2.96% in May. The fixed portion is harder to predict because the Treasury does not disclose its formula for changes.

David Enna, founder of, a website that tracks Treasury inflation-protected securities, or TIPS, and I bond rates, expects the fixed rate will be 1.2% or 1.3% in May.

But “1.4% is not out of the question,” he said.

Enna looks at a half-year average of real yields for 5- and 10-year TIPS to predict fixed rate changes. The real yield reflects how much TIPS investors earn yearly above inflation until maturity.

A possible fixed rate change from 1.3% to 1.4% “isn’t enough to make a huge difference,” but investors always prefer the higher rate, he added.

Articles You May Like

China’s sweeping measures to prop up the property sector will need time to show results
Wealth inequality starts at birth. Lawmakers debate whether child savings accounts can help
Trump Media stock falls 10% after posting $327.6 million loss in first quarter
Mental Health Awareness And Dilemmas With Aging Parents
TJX jumps 4% to a new high after earnings — here’s what investors love about the report

Leave a Reply

Your email address will not be published. Required fields are marked *