Savers who are looking to get a good deal on I Bonds should act fast, as the current annualized rate for I Bonds bought before the end of April is 6.89% for six months. To purchase I Bonds, a form can be filed with a tax return to direct part or all of a tax refund.
It’s important to note that I Bonds have restrictions such as no cashing in for 12 months, loss of 3 months’ interest if cashed before 5 years, and short-term inflation adjustment. The I-Bond rate is set twice a year, on Nov. 1 and May 1.
The inflation-adjusted rate to be announced on May 1 is likely to be lower, and the I-Bond rate for May through October could range from 2% to slightly above 5%, depending on actual inflation data. As of January, the inflation index had risen 6.4% in the past 12 months and 0.5% in January after increasing 0.1% in December.
Savers getting a tax refund in 2022 can purchase up to $5,000 of I Bonds, in addition to the regular individual limit of $10,000. Single savers can buy up to $10,000, while married couples can buy up to $25,000 by using their tax refund to buy I Bonds.
While it’s uncertain where inflation is headed in the short run, it’s good to file tax returns soon to lock up a strong rate. However, there are many unknowns for rates ahead. It appears that inflation is gradually trending downward in the long run, but it’s important to keep an eye on future rates.
A published article by Susan Tompor of USA Today on February 22, 2023, contributed to this report.