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Here’s why: The I bond rate is made up of a fixed rate, which applies for the 30-year life of the bond, ... like a 1-year Treasury at 4.82% or a 1-year CD above 5.0%." ...
The rate on the popular inflation-protected I bonds — one of the safest investments you can buy — slipped to 6.89% through April 2023 from 9.62%, according to the Treasury Department.
The fixed rates on I Bonds can vary significantly over time, depending on when the bonds were issued. I Bonds issued in 2021 and 2022, for example, have a 0% fixed rate.
For bonds issued before May 2005, the interest rate was an adjustable rate recomputed every six months at 90% of the average five-year Treasury yield for the preceding six months. Bonds issued in May 2005 or later pay a fixed interest rate for the life of the bond.
The I bond fixed rate in November 2021 and May 2022 — when rates were soaring — had a 0% fixed rate. The fixed rate increased last November to 0.4% for those who purchased the bonds through April.
During times of deflation the negative inflation rate can wipe out the return of the fixed portion, but the combined rate cannot go below 0% and the bond will not lose value. [27] Series I bonds are the only ones offered as paper bonds since 2011, and those may only be purchased by using a portion of a federal income tax refund. [28]
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