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Did you See the Current Interest Rate on I Bonds?

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Published on November 12, 2021

Did you See the Current Interest Rate on I Bonds?

We are always looking for ways to help you grow and protect your personal savings. When we heard that the U.S. Treasury was offering a phenomenal rate on I Bonds, we wanted you to be the next to know!

From November 2021 through April 2022, the interest rate on an I Bond is 7.12%. It applies for the first six months you own the bond! Up to $10,000 worth of I Bonds can be purchased annually per person through the government’s Treasury Direct website. Another $5,000 can be purchased with a tax refund, upping the annual total purchase amount of series I Bonds to $15,000.

So, what is an I Bond, and is it a safe investment?
Series I savings bonds, or I Bonds, are issued by the U.S. Treasury, making them a safe investment, and with the current 7% interest rate for at least six months, they might be a good option for investors.

I Bonds are unique in that they are designed to protect your money from losing value due to inflation by adjusting the interest rate regularly to keep up with rising prices. As inflation rises, so too does the value of your investment.

How are I Bond rates calculated?
The bond rate, sometimes called a composite rate, is a combination of the fixed rate and the inflation rate. The formula used to determine rates can be found on the Treasury Direct website. The fixed rate remains the same for the lifetime of the bond; the inflation rate can change every six months.

What do the other experts have to say about I Bonds?
Here’s how it works, according to Forbes.

“I Bonds earn interest monthly, though you don’t get access to the interest payments until you cash out the bond. Interest you earn is added to the value of the bond twice per year. This means the principal amount you earn interest on increases every six months, positioning your money to compound over time.”

According to an October 2021 article in The Balance, I Bonds are a smart investment because they, “come with guarantees, tax-deferred inflation-adjusted interest, and after one year, liquidity. They could be one of the best cash investments you ever make.”

Here is a brief look at the I Bond from the Treasury Direct I Bond page:

  • Can't be redeemed within 12 months of issue date
  • Lose three months interest if redeemed within five years
  • Interest is composed of fixed and inflation-based rate
  • Fixed rate remains for life of bond
  • The composite rate will never be less than zero
  • Inflation-based rate changes every six months after issue month
  • Federal tax can be deferred on interest until bond is redeemed
  • Interest is exempt from state and local tax
  • Some or all interest is tax exempt when used for educational expenses

If you’re open to considering unique options to grow or protect your savings, or you just want to diversify your portfolio, ask your financial advisor about I Bonds. They can help you determine if I Bonds are right for you in the current economic climate.

You can also check out the Services section of our website to learn more about financial experts you can connect with at Community Choice.

Note: You can no longer purchase paper Series I and EE savings bonds — those convenient envelope-stuffer gifts — at banks and credit unions; you must buy electronic bonds through the Treasury Department's Web-based system,

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