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 November, 2021 was just announced and it’s a hefty 7.12% APR. This is the second highest I bond rate in U.S. history, and more than double the previous 3.54% 6-month variable rate that I was overjoyed about in my I bond overview.
What’s exciting about this is that I bonds are an extremely 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: 0.27% 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 November, 2021 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 November 1, 2021 and May 1, 2022 is 7.12%. This consists of a fixed rate of 0.0% and a variable rate of 7.12%. The new variable rate will be announced May 1, 2022.
How Long is the 7.12% 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 July of 2021 would get the 3.54% APR variable rate until January of 2022, at which point the rate would increase to 7.12% APR. The next rate change would be July, 2022, when the May, 2022 rate would kick in.
Here’s a chart to help:
| 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.
- 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. Must be 18+ to buy.
- Paper: 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.
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.
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 and again in January of 2022 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), but I’m not your investment advisor, so you need to make that decision for yourself, based on your own personal financial situation.
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.