I Bonds

This page is for discussion of I Bonds which are issued by the U.S. treasury.

I Bonds have a ‘fixed rate’ portion and an additional portion which is adjusted twice per year at a rate dependent upon the rate of inflation.

The current interest rate on the bonds is 7.12% through 4/30/2022 after which they will adjust for the next 6 months. It is estimated that the new interest rate will be in the 9.5% area.

You can buy these bonds on the Treasury Direct site — here. All the details are on this page and there are penalties for early withdrawal so make sure you check out the details.

You may purchase up to $10,000 annually – a couple can have 2 accounts and buy $20,000 total.

314 thoughts on “I Bonds”

  1. Selling I-bonds question. Decided to sell a paper one with zero fixed. Called
    Chase bank and person had to look it up, but said they could be cashed at local branch. Turns out local branch has limit of 200 on bonds they will cash in. It appears only alternative is to mail them to Treasury Direct.

    Has anyone done this yet? Bonds you cash in person need to be signed, but I cannot find on TD website whether you need to sign bonds you are mailing in. TD help line is backed up.

    1. The instructions are on TD. If you don’t have a TD account, sign up for one first. Then you must open a conversion account and print out a manifest, where you’ll enter the I-bond’s serial number. You sign the manifest but NOT the bond! Repeat, do not sign the bond. Then you mail it to a P.O. box number or Fedex/UPS it to a street address. Then you wait and wait until you get a confirmation from TD that they received it. And then you wait a lot longer before they convert it (possibly 3-6 months).
      Full instructions: https://www.treasurydirect.gov/savings-bonds/manage-bonds/convert-paper-to-electronic/

  2. Treasury just announced next fixed cycle at 1.3% with 5.27% as yield for next 6 month cycle. Very chintzy considering how high the TIPS fixed yield is presently. The Series EE bonds were “raised” to 2.75%. Somebody needs to be dragged behind the woodshed for issuing that yield.

    1. i wonder if it makes sense to switch out of a few zero percent i bonds and buy these
      you would have to pay the penalty. but gaining it back with the coupon
      something to ponder as i probably won’t do it til after the first so i don’t have to pay the tax this year

      1. Definitely worth switching out whether you take the extra 1.3% or just buy something else with the money. Takes 8 months to recoup your 0.85% penalty then you get the higher rate forever, only drawback is you start the 5 year clock over if you buy the new one. I might wait until January to push the tax liability into 2024 but that’s small change.

        1. Playing Devil’s Advocate here, if you’re selling your old IBond from the big yield days and buying the new, then don’t you have accrued from the old that you will not be able to reinvest because of the 10k limit? Isn’t there a compounding factor involved in holding the old one on its own for a while longer and just deciding whether or not the new term’s provisions are good enough to invest in on their own? Either way I suppose were not talking about vast improvements doing it one way or the other.

    2. Grid:

      So if one is unfortunate enough to be stuck with some I-Bonds paying zero on the fixed rate (when some commenters on this site started pumping their benefits), your yield for the next 6 months is a paltry 3.97%.

      That is almost criminal. Treasury Direct is going to likely get hit with a flurry of selling when 2024 kicks in!

      1. I dont agree with that assessment at all. My woodshed reference is to the 2.75% Series EE bonds. Its really hard to pump IBonds. It wasnt like the govt slide in a 0% unsuspecting. They are what they are and are determined by inflation plus fixed if given. The purpose of these is different than other investing vehicles. They definitely served my purpose. And I suspect most who held IBonds past 2 years has done considerably better than one who bought and held a fixed perpetual issued 2 years ago.
        I still have some IBonds but recently toed into TIPS as the fixed is considerably higher now. But once again, its these are viewed in the context of what specific goal you have for the capital invested.

      2. Yeah – I am dumping all of my and my wife’s I-Bonds on January 1

        They served their purpose for when we had them but the rates (non fixed) they now provide are indeed near criminal

        Waiting until Jan 1 to defer taxes on them since we each have $30K principal plus interest. Even just putting them in a 6 or 12 month Treasury, I will recoup the 3 month penalty rather quickly

        1. Mav, I have two original 10k bought over 2 years ago, Im waiting until Jan. 1 also. I have enough taxes to pay this year already. At that point I will decide whether to repurchase to get the 1.3%, buy more TIPS, or maybe something on market has cratered even more for a good look at.

          1. Yeah Grid – it makes no sense to me to hold them. Even if you still want the money in I bonds, as MartinG noted, you can make up the penalty in about 8 months if you reinvest in Ibonds with the fixed rate

            For me, I never viewed these as a long term hold. I just took advantage of the high rates for when they were around. Now that all of mine have ticked down to the low rate for the penalty period, it is an easy call to swap out of them. So likely will just buy treasuries with the proceeds in January

        2. I have already cashed them out in three accounts and reinvested the proceeds. I have a schedule of when the others roll out of the higher interest rate payments and will cash those out then.

          If the fixed portion gets up more like 2% they may be a long term hold, but less than that and it will just be a safe harbor during the storm for me. I might still get back in at the first of the year if there is nothing else better, but I do not foresee that.

    3. Grid, I want that 1.3% fixed-component and will be going all-in. Equal parts boring and reliable, volatile-free, AAA-rated, guaranteed 1.3% return north of inflation for up to 30 years, guaranteed return of principal, tax-deferred and state tax-free in withdrawal. Also a symmetrical risk set-up, in that one can redeem at any time after one year with no loss of principal no matter what market yields are doing. The beauty in this one I believe is more evident over time and various market cycles. Along with recent adds in treasuries and CDs, another measure of safe ballast that retains optionality.

      Now we can only hope the next issuance carries an even higher fixed component and will go all-in again, averaging up the fixed component…both primary buyers and gifts spread across the annual two 6-month cycles.

      1. Alpha, I almost bought some TIPs yesterday, but backed off. Been thinking for them to really be appreciably important you have to extend out duration. And then that exposes you two different ways to taking potentially big unrealized capital losses. Unlike the IBond brethren which as you stated do not.
        So Im leaning back to adding 10k more at 1.3% with what I presently have and then waiting on gifting closer to end of this cycle. I have some TIPS of about 4 yr duration. But after thinking it over owning of that duration is like being half pregnant. Thinking about just mental accounting of all IBonds as “liquid cash” which allows me comfort of just viewing it as that and not expecting those monies to “perform”.

        1. Grid, You already know I agree. In looking at TIPS the volatility became an issue, whereas the IBond variable rate was almost secondary to that gold-plated 1.3% “forever” fixed over inflation. Hoping for more in April. Love the ballast to holdings and an option to bail-out with all our doubloons guaranteed-intact at any time after one year. IBond “ballast” certainly proved it’s merit over the past 24-months compared to a standard preferred held through that period.

  3. It appears I-bonds I purchased back in 10/1/21 and 1/1/22 (issue dates) have finally reached that critical point I can redeem them without losing any of the larger yields. It was the 1/1/22 purchases that I was waiting on. I found this website below valuable.


    So I will wait until Nov 1st 2023 to redeem on the first of the month because you do not get paid for a partial month if you redeem Nov 27th for example.

    I will wait to see what the fixed rate is going forward to determine any future purchase but I have the feeling my I-Bond adventure is over for now.

    1. Another factor to consider is whether you want the interest on this year or next year’s taxes.

      1. Close call. Push interest into next year at the cost of a few bucks interest? I couldn’t decide so I’m doing half and half.

  4. Fixed rate on November’s I Bonds could exceed 1.5%

    From Barron’s:
    New Rate on Treasury’s I Bonds Could Rise Past 5%
    The new rate on Treasury Series I inflation-linked savings bonds could come in at more than 5%, based on the September consumer price index reported Thursday.
    The Treasury sets a new rate on the I bonds every six months, and the next one is due to be announced around Nov. 1. The current rate of 4.3% will be in effect for I bonds purchased until the end of October.
    The new rate will be based on the six-month change in the CPI ending in September, without seasonal adjustment, plus a fixed rate that has yet to be determined. 
    The six-month change in the CPI was 1.97%, Barron’s calculates. That amount is doubled to 3.9% to arrive at the inflation component of the new rate. The fixed-rate component of the new I bond rate, which doesn’t change over the life of the bonds, could exceed 1.5%, Barron’s projects. 
    The fixed-rate component of currently issued I bonds is 0.9%. But since that rate was set In May, real yields on Treasury inflation-protected securities, or TIPS, have moved up by around one percentage point to near 2.3% for the 10-year maturity. 
    The new rate on I bonds will apply for the first six months that an investor holds them and then reset every six months based on the CPI. I bonds mature in 30 years but can be redeemed after 12 months. Investors lose a quarter’s interest if the bonds are cashed in before five years.
    I Bonds were very popular in 2022, when inflation was running hot. The I Bond rate was 9.6% from May through October of that year. But demand has waned, partly because of the drop in inflation since then, but also as a result of the sharp rise in short-term rates to 5%, which has increased the popularity of money-market funds and Treasury bills.
    I bonds are only available through the TreasuryDirect website. Individuals are limited to $10,000 in annual purchases, but those with businesses structured as certain partnerships can get around that cap.
    Semiannual interest is added to the principal value of the bond, compounding over the life of the bond. This differs from Treasury notes and bonds, which make cash interest payments. This is a favorable feature because it eliminates risk on the reinvestment of interest.
    Another appealing feature of I bonds is that holders can defer paying taxes on the interest income until they redeem the bonds. This gives I bonds an IRA-like quality.
    Interest is exempt from state and local income taxes but is subject to federal income tax, which is the same as for Treasury notes and bonds. This makes I bond taxation more favorable than that for bank deposits, whose interest is subject to federal, state, and local income taxes.

  5. Sep cpi-u was .25% and the reset variable 6 months rate for i-bonds will be 1.97%.

    With a (hopefully) close to 1% fixed rate on Nov, this will mean new i-bonds will be yielding ~5%/yr.

    Are any III’s readers still thinking on buying more i-bonds at this rate?
    I might if the fixed rate becomes a bit more attractive, maybe replacing old ones at 0% fixed rate, but will need to wait until the beginning of 2024, although at current rates TIPS may be a better option.

    1. When you say “maybe replacing old ones at 0% fixed rate,” what do you mean? By replacing you only mean selling the old one and using the same proceeds to buy the new one, right? If your old one is less than 5 years old, is it worth it to give up 3 month’s interest and start the 5 year clock all over again? I’ve not put much thought into this but to me the idea of essentially swapping into one that includes paying a fixed rate with an old IBond paying no fixed rate just doesn’t seem to be worth it. Is it the hefty compounding effect that started 2 years ago that makes this worthwhile to do?

      1. I certainly do, 2WR. If we get a fixed closer to 2% than 1%, I will not only redeem the remaining 0’s, I will have my GF gift me 30k to build the fixed stash higher. But I will waiting on redeeming and just focus on gifting until I see what the following 6 month cycle will bring. As I am inclined just to hang on near term the zero at around 4%. I also have a .4% I will continue holding.

        1. Grid, We’re pulling on the same oar.

          What I-Bonds lack in excitement they replace with constancy. While at any given moment they appear to be yield-inferior, they are a hedge against the unknown and a guaranteed positive-return, 100% of capital-intact inflation-beater, especially with the fixed kicker.

          An reliably accretive small corner of holdings.

      2. 2wr,

        That’s the idea, but I have the same questions as you have. I said “maybe”: if I have the cash I may just buy a (or some, via gifts) new one(s) leaving the old ones, but if I need the $, then selling an old one is possible.

        My calculation is: forfeiting 3 months at current rates (and 0% fixed) is equivalent to about 0.85%, which are payed back to me in a few months with the new one. Also to consider when selling is that I would have to pay taxes now instead of continuing to defer.

        If the fixed rate is closer to 2%, as Grid writes, i-bonds become even more attractive to me, as making ~2% above inflation, tax deferred and practically risk free, matches my risk/reward profile. BUT, if this is the case, one has to compare i-bonds with TIPS which at current rates give a bit higher return. However, because I am lazy, the simplicity of i-bonds as opposed to TIPS, makes me want to stick to i-bonds.

        1. Sounds like we’ve got similar approaches…. if I got the cash, the old I’s will remain and I’ll just decide on new ones after the announcement… And as far as TIPS, I’ve never taken the time to understand them – looked at them a long time ago and decided they seemed to be way to back end loaded to be worthwhile but always felt I was missing something in thinking that way… So I don’t consider them to be much of an alternative.

          2% fixed will do it for me too…..

          1. 2WR, The TIPS have a considerably higher fixed than IBonds. Well over 2% currently. But they have more pricing volatility and are subject to possible big losses if sold before maturity. I bought some a little while back with a fixed of 2.2% just under 5 year maturity. They are probably a bit under water now. But if held until maturity this will not happen. Thus my personal preference not to extend duration long with these.. The IBonds have a lower fixed, but the main positives are ones capital is never at risk if one sells, and the income can be deferred until one sells.
            With TIPs one only gets the fixed component interest given to them. At maturity, a TIPS investor will receive the original face value plus the sum of all the inflation adjustments since the bond was issued.

            1. Hence a good description of the back-end loading I thought I remembered as the reason for me deciding to ignore TIPS… Thanks, Grid. How long ago is “a little while back?” Because I’m thinking here we’ve been thru a huge inflation uptick cycle the past 2 years or so, a time that you would think was meant for TIPS investing and you’re slightly underwater? Case closed..

              1. No, I mean like a month or two ago. I just checked and it appears to be near where I purchased it. But I bought one well under par with a lower fixed and it matures in 4 years I just checked. Its only $20k and its in my account that got moved to Schwab, so I rarely open that one up.
                But yes, unlike IBonds you dont get all the money upfront. You have to wait until maturity. Though I suspect it gets baked into the issues price.

                1. I’m guessing I’d be as equally amused as I’d be by smelling the bouquet of a dead beer bottle with a butt in it after a frat party….. ha….. there’s just something about TIPS that I just don’t want to understand I guess…but thanks for thinking of me…. lol

                  1. At the end of the day if held until maturity, they are easier to understand than making a spreadsheet, ha.

                    1. I just noticed a Dear Abby type Marketwatch article about buying and then having forgotten about an IBond that mentions what might be a handy little calculator that can give you your exact performance on either IBonds or TIPS calculated based on the exact month you originally bot them – The article is https://www.marketwatch.com/story/i-bought-series-i-bonds-then-forgot-about-them-are-they-still-worth-anything-or-should-i-sell-them-bd4556c4 and the truly barebones calculator is http://eyebonds.info/ . Ever heard of it? It’s simple as all get out but looks like it could be a handy dandy little tool to keep in mind your actual yield and compounded amount achieved over the time you’ve owned either…

                    2. The key part to the article for buy and holders through duration looking to compare the two is this…..
                      The way Erhart thinks about I-bonds is that you’re getting the rate of inflation plus a fixed rate, and that fixed rate is what compares to the real yield on TIPS. “I-bonds are at 0.9% right now and TIPS are at 2.5%, so you’re getting basically triple the real rate of return,” he says.
                      ….But I expect that spread to narrow come Nov. 1 though.
                      I have that IBond calculator. I really dont need to use it though. TD credits the interest in the account to know what I have.

                    3. Thanks, Grid – What the calculator does for me at least in theory is provide a smoothed out actual performance yield that takes into account the compounding effect from Day 1 (actually Month 1) thru to present. So you can see just how important it was to have bot in those 9.63% months…. I suppose it shouldn’t really impact anyone’s decision on what should he do now decision of whether or not to swap out of 0% fixed IBonds for new ones if they hit the 2% fixed range next month, but it does put in black and white the yield, not just the dollar amount increase an IBond purchaser has achieved over time… And hey, it looks like all the “Downloads” shown on the site are all spreadsheet based too… O boy! Zzzzzzzzzzzzzzzz.

                  2. 2WR, If your feeling frisky the Treasury is going to have a 5 year TIPS auction this Thursday. They dont have them nearly as often as the fixed issuances. Present fixed is running about 2.4% for current 5 year variety. You can buy through your brokerage, but through your TD account you can buy as little as a $100 worth. Im tempted to add a bit more to my TIPS. 5 years is as far as I am willing to go out though.

                    1. Thanks, Grid – I did notice them listed on Fidelity’s Friday summary of upcoming Treasury auctions they send to me…. I’ll run the possible choices thru my spreadsheet and let it tell me if I should bid or not………… ha

  6. Well, I got an unpleasant surprise today when I went to Chase to cash in some paper I-Bonds. Chase no longer will handle any I-Bond having a face value over $200. So now I will have to figure out how to convert these to my online Treasury Direct account. Anybody have any other suggestions? Thanks.

    1. I know this is not the best advice but I would find a new bank, open an account if they handle ibonds properly as a bank should do, and slowly move away from Chase. What is the point of using a bank if they don’t care about you and your banking needs?

      Otherwise please see this website:


      Scroll down on how to “How do I cash my paper savings bonds?” Form 1522.

      1. I opened a checking account at Wells Fargo and deposited all of my paper I-Bonds. Problem solved. I will probably close the WF account in a few months after I draw the balance to zero. I will stay with Chase because their online system works so well. Also I have numerous direct deposits that come to the Chase accounts. I don’t want to have to change those to WF.

        1. All the big banks are getting hard to deal with.

          I had a contract employee (whom I had known for decades) who couldn’t get the local Chase branch to accept her paycheck (as in refused it as a deposit into her Chase account) because “it might be fraudulent”. I had personally signed the check, so I went to the bank with her and had a discussion with the bank manager. His concern seemed to be that the company was so new. Couldn’t even get him to describe what he would accept as proof that it wasn’t fraudulent. Showed my ID, showed the company articles, showed a company bank statement that showed a hefty balance. I even pointed out that it would be a crime for me to issue a fraudulent check, and he now had me on bank cameras helping their customer deposit the check. Nothing I offered was good enough, and he wouldn’t say what would be. Just crazy. Ended up going to the local credit union where she still had a small account. No problem there.

          By the way tex, watch your mail. The good folks at WF might open other new accounts for you, or even get you a credit card…

    2. If you are not in a big hurry, I would just convert them. It is not difficult. When I’ve done it, it took 2-3 weeks, but that can vary wildly.

      1. I agree with David. I did it maybe 10 years or so ago on previous IBond spike. It was a breeze converting them and I am a Luddite by nature. Just follow the directions.

    3. Paul,
      I had the same problem. I chose to convert all my paper bonds to electronic. The process takes about 90 days. I had 60 plus paper bonds that ive been sending in batches (just in case). I started sending them in July and just sent my last batch last week. It takes about a week from day they are mailed to receive a acknowledgment of receipt. The about 90 days till they appear in your account. Be warned! they lose there serial number. IE C900123123I will turn into IAAAA with no reference of past S/N. I found this a little confusing trying to make sure they are all accounted for and properly valued. You also have to segregate them into ownership on the shipping manifest you will create. IE multiple owners, beneficiaries, etc.
      They do not notify you when they are converted… you have to keep checking.
      How this helps

    4. PS.
      “California woman pleads guilty in $1.6 million counterfeit Series I savings bond scheme. CNBC”
      I thought this is relevant. Maybe one reason why you bank stopped accepting large denominations. Also I’m guessing the bank has to wait 90 days for the money?

  7. Based on today’s CPI-U print of 306.273 for August 2023 and my back of the envelope math, I calculate the variable Ibond Nov 1 2023 interest rate to be 4.48%. Assuming that the fixed rate of 0.90% does not change, the composite Ibond interest rate will be 5.42% November 1st. However, since there was a 0.25% increase in July 2023, the fixed rate should increase to at least 1%. Therefore, my new prediction is the composite interest rate will be 5.52% on November 1st. Not a bad place to park $10K or $20K if you can overlook the the non user friendly Treasury Direct website.

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