Beat Inflation with Smart Savings: Act Fast Before Series I Bond Rates Drop!

Here’s why it could be better to buy Series I bonds before May, experts say

Series I bonds, a type of inflation-protected bond issued by the U.S. Treasury, may see a decline in their annual interest rate from the current 5.27% in May.

This could be driven by a decrease in inflation, leading to a lower variable interest rate component of the bond.

While short-term investors may find better options elsewhere in the market, long-term investors may still benefit from the bonds’ fixed interest rate component, which will remain unchanged after purchase.

If you purchase I bonds before May 1, you can lock in the current annual rate of 5.27% for the first six months.

After that, the variable interest rate will adjust to the new rate announced in May, which is expected to be around 4.27%.

However, the fixed interest rate may remain close to 1.3%.

Experts recommend that if you have not reached your purchase limit for 2024 and are interested in I bonds, it may be wise to consider purchasing them before the end of April to secure the higher 5.27% rate for the first six months.

For short-term investors, alternative options such as certificates of deposit (CDs), high-yield savings accounts, Treasury bills, or money market funds may offer competitive interest rates.

These investments may be more suitable for investors who are seeking flexibility and can adjust to changing market conditions.

It’s important to consider your individual financial goals and investment horizon when making a decision about I bonds.

While the fixed interest rate may appeal to long-term investors seeking stability, short-term investors may explore other options that provide more flexibility and potential for higher returns.