This article has been updated to reflect the new May to November, 2022 period. Big news for savers and investors searching for the rare strong rate of return paired with low risk: the U.S. Treasury Series I Savings Bond interest rate for May, 2022 was just announced and it’s an eye-opening 9.62% APR. This is the highest I bond rate offered since their launch in 1998 and nearly triple the rate that I was overjoyed about when I first purchased an I bond and wrote about them in my I bond overview. It’s also an increase of 2.5 percentage points over the previous (October, 2021 through April, 2022) rate of 7.12%. You can buy I Bonds online at this new 9.62% rate through the end of October 2022 and you will get that rate for a 6-month period.
What’s exciting about this is that I bonds are a very safe investment with a guaranteed rate of return (for 6 months) from the U.S. Treasury. Comparatively safe bank investments, meanwhile, are coming at the following paltry rates (current national averages):
- 5-year CDs: 0.39% APR
- Savings accounts: 0.06% APR
- Checking accounts: 0.04% APR
If you have funds in these types of accounts that you don’t anticipate needing for the next year (e.g. emergency savings), then it’s worth looking into potentially moving over. Check out the aforementioned I bond article for more basic I bond details, and I’ll also give you a quick primer below.
What is the May, 2022 I Bond Rate?
I bond interest rates are a combination of a fixed rate (which you get for the life of the bond) and a variable rate that changes every 6 months. Fixed and variable rates are announced every 6 months (on May 1 and November 1). The current I bond rate for bonds issues between May 1, 2022 and November 1, 2022 is 9.62%. This consists of a fixed rate of 0.0% and a variable rate of 9.62%. The new variable rate will be announced November 1, 2022.
How Long is the 9.62% Variable I Bond Rate Good For?
You receive the variable rate for 6 months from the date of issue. Rates are compounded semiannually. For example, an I bond purchased in January of 2022 would get the 7.12% APR variable rate until July of 2022, at which point the rate would increase to 9.62% APR for the subsequent 6 months. The next rate change for that bond would be January, 2023, when the November, 2022 rate would kick in for 6 months.
Here’s a chart to help explain:
| I Bond Month of Issue | New Rates Take Effect |
|---|---|
| January | January 1 & July 1 |
| February | February 1 & August 1 |
| March | March 1 & September 1 |
| April | April 1 & October 1 |
| May | May 1 & November 1 |
| June | June 1 & December 1 |
| July | July 1 & January 1 |
| August | August 1 & February 1 |
| September | September 1 & March 1 |
| October | October 1 & April 1 |
| November | November 1 & May 1 |
| December | December 1 & June 1 |
How Much I Bonds Can you Buy Per Calendar Year?
It depends on how you purchase them.
- Individuals (at Treasurydirect.gov): you can buy $10,000 per calendar year, per account holder, in digital I bonds through the U.S. Department of Treasury at treasurydirect.gov. Individuals with a Social Security number can have 1 account each. Must be 18+ to buy.
- Individuals (Tax Return): you can buy up to $5,000 per Social Security number in literal paper bonds through the IRS as a form of tax refund payment using IRS Form 8888 (joint filers can purchase for each of the 2 filers) when you submit your tax return.
- Living Trust (at Treasurydirect.gov): living trusts can purchase up to $10,000 per year through the name of the trust. This is definitely a more complicated option, but good to be aware of.
So, hypothetically, an individual could buy up to $15,000 per calendar year in I bonds, or a couple could buy up to $30,000 per year. Buying through a trust would open up an additional $10,000 per trust.
Is There an Early Withdrawal Penalty for I Bonds?
What if you need to access funds immediately, for whatever reason, or future I Bond rates go up and you want to cash out and buy new I Bonds? Here’s a breakdown:
- I bonds have a 30 year expiry from the date of purchase.
- I bonds must be held for a minimum of one year.
- If an issue is held for less than 5 years (but more than 1 year), the holder can cash in their issue, but will forfeit the most recent 3 months of interest returns as a penalty.
Should I Invest in I Bonds?
I am personally investing in I Bonds this year because I currently see them as a safe option with a significantly higher return in the short-term than similar investments (e.g. savings accounts, CDs, MMAs). No investment is 100% failsafe, however, and I’m not your investment advisor, so you should do your research and make a decision for yourself, based on your own personal financial situation.
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So there is no guarantee next year. the rates could drop and these I bonds too.
Yes, I think I made that clear multiple times in the article. =)
Do you know why the rate would jump so high? What is it in response to? What does it indicate in terms of how they’re viewing the economy? Or am I trying to read too much into it?
Yes – highlighted in the overview article, but the variable rate is a reflection of the current consumer price index. All the more reason to take advantage of the high rate while you can (or take on higher risk with investing), as the value of money sitting around earning close to zero interest is being eroded.
you state: Digitally: you can buy $10,000 per calendar year, per account holder, in digital I bonds through the U.S. Department of Treasury at treasurydirect.gov. Individuals with a Social Security number can have 1 account each… you must be 18 to purchase, a SS number does not let you make buys automatically.
Yes, although a parent or other adult can purchase on behalf of a child: “A parent or other adult custodian may open for the child a TreasuryDirect account that is linked to the adult’s TreasuryDirect account. The parent or other adult custodian can buy securities and conduct other transactions for the child, and other adults can buy savings bonds for the child as gifts.”
I don’t expect many 12-year olds to be buying I bonds for their selves. ;-)
Wow that is pretty crazy if true. That’s a massive jump.
I can assure you that it is true.
I was awaiting the % number this morning. Saw 9.62 and bought 10k. I have no confidence in the market going up in the next year. But I have every confidence that inflation will be high for quite some time. The Fed is in a box where the have to choose between saving the markets or fighting inflation by raising rates. They’ll raise rates a bit (3.5% ?) but not enough to create positive real rates.
Why didn’t you mention that an additional $10,000 of Series I bonds can be purchased through a trust?
I’ve added that to the article, but that is definitely more of a limited circumstance for most.
G.E. – do you when interest shows up in an I-Bond account? I put in 5k in January and thought with the rate change my interest would show but still says 5k. Does it populate when my account hits 6 months old in July? I looked at treasury direct site and did not get a clear answer (the site also seems 15 years out of date but can’t beat the rate). Thanks!
Monthly. Go to the current holdings tab and scroll to the bottom to see current value.