On May 1, the Treasury Department announced the newI bondrate: 4.30%.
Right now, top savings accounts and certificates of deposit are offering between 4.00% and 5.00% APY.
And since the latest Federal Reserverate hike, savings rates may get even better.
CNET’s best savings rates this week
Rates as of May 8, 2023.
Rising Bank also boosted its six-month CD up to 5%.
The Treasury Department recently announced itslatest I bond ratefor the next six months – 4.30% APY.
So does it make sense to invest in an I bond right now?
But I bonds work a little differently than CDs.
However, right now the fixed rate is 0.9% APY, which is relatively high for I bonds.
“The realized yield for investors buying I bonds today will highly depend on inflation over time.
With CDs, the rate is typically fixed and known in advance,” said Keller.
But if it decreases, your return might be smaller.
Instead, if you’re opening a CD, you’ll have two choices, said Keller.
But with inflation coming down, your I bond rate may not be as good as two years ago.
“At this rate, they are accomplishing the difficult task of remaining ahead of inflation.”
That includes tax considerations.
CDs are subject to state and federal taxes since the interest earned is considered income.
There are a few other tax exemptions available with I bonds, too.
Or you may choose a more flexible option altogether.
However, it’s possible for you to make regular withdrawals and contributions.
Plus, when rates go up, chances are, your savings rate will, too.
FAQs
Are I bonds safe?
The US Treasury Department backs I bonds to protect your money against risk, hack, or inflation.
Instead, you’ll only be able to get $15,000 in I bonds per person, per year.
How long does it take I bonds to mature?
I bonds mature after 30 years, but others, like Series EE bonds, only take 20 years.
