I savings bonds earn interest monthly. Interest is compounded semiannually, meaning that every 6 months we apply the bond's interest rate to a new principal value.
I bonds earn interest from the first day of the month you buy them. Twice a year, we add all the interest the bond earned in the previous 6 months to the main (principal) value of the bond. That gives the bond a new value (old value + interest earned).
Cons of Buying I Bonds
I bonds are meant for longer-term investors. If you don't hold on to your I bond for a full year, you will not receive any interest. You must create an account at TreasuryDirect to buy I bonds; they cannot be purchased through your custodian, online investment account, or local bank.
I bonds earn interest monthly, though you don't get access to the interest payments until you cash out the bond. Interest you earn is added to the value of the bond twice per year.
The annualized variable rate of 3.38% is based on inflation running at 1.69% from September 2022 to March 2023, and represents a significant decline from recent previous rates. Starting in May 2023, Series I bonds will earn a minimum interest rate of 3.38% according to newly released U.S. inflation data.
Mortgage Bankers Association (MBA).
“Long-term rates have already peaked. We expect that 30-year mortgage rates will end 2023 at 5.2%.”
I Bonds earn interest each month, and the interest is compounded every six months. You can earn interest on them for as long as 30 years, and can cash them out after 5 years without losing interest. You lose only three months interest if you cash them out before you reach 5 years.
A $500 Series EE savings bond is worth $1,000, if you hold it for 20 years. A $10,000 bond is worth $20,000 after 20 years.
Another advantage is that TIPS make regular, semiannual interest payments, whereas I Bond investors only receive their accrued income when they sell. That makes TIPS preferable to I Bonds for those seeking current income.
Variable interest rates are a risk you can't discount when you buy an I bond, and it's not like you can just sell the bond when the rate falls. You're locked in for the first year, unable to sell at all. Even after that, there's a penalty of three months' interest if you sell before five years.
Step 1: Max out your $10,000 per person calendar year limit conventionally. You can buy $10,000 yourself and your spouse can buy $10,000 through their Treasury Direct login. Step 2: You could buy $10,000 or more in gift I Bonds in May that you could deliver to your spouse in future years.
Are I bonds a good investment for you? I bonds can make good short-term investments, but you should feel comfortable holding them for at least one year and ideally, five years before cashing them in. They can be a good fit for seniors who want to earn interest on their savings while also keeping their nest egg safe.
Individuals, organizations, fiduciaries, and corporate investors may buy Treasury securities through a bank, broker, or dealer.
I bonds also have important tax advantages for owners. For example, interest earned on I bonds is exempt from state and local taxation. Also, owners can defer federal income tax on the accrued interest for up to 30 years.
The fixed rate stays the same for the life of the bond. The inflation rate can change every six months from the issue date of the bond. When the inflation rate changes, the earnings rate does too.
May 2023 fixed rate will be 0.90%, total composite rate is 4.30% for next 6 months. For Savings I bonds bought from May 1, 2023 through October 31, 2023, the fixed rate will be 0.90% and the total composite rate will be 4.30%.
The May 2023 I Bond Rate
The May 2023 I bond composite rate is 4.30% (US Treasury) which is 2.15% earned over 6 months.
Rabobank High Interest Savings Account
5.00% introductory interest rate is only available for the first four months. Balance cannot exceed $250,000.
While 7% with Landmark Credit Union is the highest available interest rate, other high-yield savings accounts exist and may be more worth it based on each bank's unique requirements.
As the Fed works to address inflation, borrowers can expect higher personal loan interest rates in 2023. Personal loan rates to increase slightly in 2023 due to pressure from the Fed. Average interest rates increased from 10.28 percent in early January to 10.95 percent in May 2023.
How Many Times Can I Refinance My Mortgage? There's no legal limit on the number of times you can refinance your home loan. However, mortgage lenders do have a few mortgage refinance requirements that need to be met each time you apply, and there are some special considerations to note if you want a cash-out refinance.