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Key Takeaways
- I bonds paid rates as high as 9.62% from late 2021 though early 2023. But most I bonds bought then now pay less than 4%.
- CD rates, on the other hand, have soared, with dozens of the best nationwide CDs offering record rates above 5% APY. That makes it a smart time to move I bond money into a CD.
- You can redeem an I bond anytime after one year, though you’ll pay a penalty if the bond is less than five years old. For many I bond holders, it’s worth it to incur the penalty and move the money where it can earn a higher return.
- The smartest day to cash in an I bond is always the first of the month (i.e., when you’ve just collected the latest monthly interest payment).
I Bonds Were Wildly Popular in 2022—But CDs Now Pay More
Last year was a historic period for I bonds. That’s because the U.S. Treasury-issued bonds were paying returns of almost 10%, the highest rate they had ever offered. Since that looks more like a stock market return than what you can usually expect from a safe, risk-free investment, legions of Americans snapped up these bonds.
Those who bought between November 2021 and April 2023 enjoyed initial rates of 7.12%, 9.62%, and 6.89% (see tables below). But I bond rates are indexed to inflation (hence the name), and with inflation cooling significantly this year, the current rate for I bonds purchased during this period has fallen to between 3.38% and 3.94%, depending on the month the I bond was purchased. (An exception is bonds purchased between Nov. 1, 2022 and Jan. 1, 2023, which are currently paying a slightly higher 4.35%.)
That means you can now earn more by moving your money to a top-paying CD, dozens of which offer rates above 5%. Granted, cashing in any I bond that’s less than five years old will result in an early withdrawal penalty. But the penalty is reasonably mild for most current I bond holders.
What Your Particular I Bond Is Paying Right Now
Your I bond rate changes every six months and is pegged to the month you purchased the bond. So a bond purchased any day in, say, October 2022, would have the same Oct. 1, 2022 issue date. And your first interest payment would be on Nov. 1, 2022. You would receive six interest payments at your initial rate, then six interest payments at the next rate (months 7–12), and so forth.
In the tables below, you can find your I bond purchase date to see not only what rates you have earned to date, but what rate you will earn with your next interest payment on Feb. 1.
You may have read in November that the next 6-month I bond rate had been announced. Though the headline rate was 5.27%, that only applies to newly issued I bonds. For anyone with an existing I bond bought between November 2021 and April 2023, the corresponding 6-month rate is either 3.94% or 4.35%, depending on which month you bought it.
Purchases Between November 2021 and April 2022
The first big wave of I bond purchasers occurred during this time period, after the U.S. Treasury announced an initial 6-month rate of 7.12%. If you were in this group, you were then further rewarded when the next 6-month rate was announced to be 9.62%.
But now, you’re earning just 3.94% if you bought during the first three months of this time period, or 3.38% for those who bought in the second half of the window.
| Bond Purchase Month | Rate Earned in Months 1–6 | Rate Earned in Months 7–12 | Rate Earned in Months 13–18 | Rate Earned in Months 19–24 | Rate You’ll Earn on Feb. 1 |
|---|---|---|---|---|---|
| Nov 2021 | 7.12% | 9.62% | 6.48% | 3.38% | 3.94% |
| Dec 2021 | 7.12% | 9.62% | 6.48% | 3.38% | 3.94% |
| Jan 2022 | 7.12% | 9.62% | 6.48% | 3.38% | 3.94% |
| Feb 2022 | 7.12% | 9.62% | 6.48% | 3.38% | 3.38% |
| Mar 2022 | 7.12% | 9.62% | 6.48% | 3.38% | 3.38% |
| Apr 2022 | 7.12% | 9.62% | 6.48% | 3.38% | 3.38% |
Purchases Between May 2022 and October 2022
I bond purchases really took off after the May 2022 rate announcement of 9.62%. It was the highest rate ever offered on an I bond, and the rate rivaled what you can typically earn in the stock market—but without the risk. As a result, thousands of Americans snapped up I bonds during this time period, earning 9.62% initially and then later 6.48%.
But like those who purchased six months earlier, the rate you’ll earn on Feb. 1 is now down to 3.94% if you purchased between May and July 2022, or 3.38% if you purchased between August and October 2022.
| Bond Purchase Month | Rate Earned in Months 1–6 | Rate Earned in Months 7–12 | Rate Earned in Months 13–18 | Rate Earned in Months 19–24 | Rate You’ll Earn Feb. 1 |
|---|---|---|---|---|---|
| May 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 3.94% |
| Jun 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 3.94% |
| Jul 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 3.94% |
| Aug 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 3.38% |
| Sep 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 3.38% |
| Oct 2022 | 9.62% | 6.48% | 3.38% | 3.94% | 3.38% |
Purchases Between November 2022 and April 2023
Though purchasers in this time period missed out on the earlier 7.12% and 9.62% rates, many still found the initial 6.89% offer worth buying into. If you bought during this time, your rate dropped to 3.79% after six months but then rose a bit to 4.35% after hitting the one-year mark. That applies to those with a bond issue date in November 2022, December 2022, and January 2023.
| Bond Purchase Month | Rate Earned in Months 1–6 | Rate Earned in Months 7–12 | Rate Earned in Months 13–18 | Rate You’ll Earn Feb. 1 |
|---|---|---|---|---|
| Nov 2022 | 6.89% | 3.79% | 4.35% | 4.35% |
| Dec 2022 | 6.89% | 3.79% | 4.35% | 4.35% |
| Jan 2023 | 6.89% | 3.79% | 4.35% | 4.35% |
| Feb 2023 | 6.89% | 3.79% | 4.35% | 3.79% |
| Mar 2023* | 6.89% | 3.79% | 4.35% | 3.79% |
| Apr 2023* | 6.89% | 3.79% | 4.35% | 3.79% |
Have I bonds purchased before November 2021? Every 6-month rate for all bond issue dates going back to 1998 can be found in the U.S. Treasury’s I Bond Rate Chart.
Today’s Best CDs Pay More Than Existing I Bonds
With I bond rates down to the 3% range, they’re no longer as attractive a savings vehicle. Though it’s possible that I bond rates could rise in the near future, I bond rates can never be predicted more than a few weeks before the next semiannual announcement (the next of which will be May 1). Add to this that the Federal Reserve remains committed to bringing inflation further below the current level, and it’s a reasonable expectation that I bond rates in 2024 and 2025 are more likely to decline than to rise.
Fortunately, you can benefit from some lucky timing right now, as certificate of deposit (CD) rates soared in 2023—and are still paying rates not far below their historic peak. Dozens of nationally available certificates are paying rates of 5% or more, with the nationwide leader offering as much as 5.70% APY.
This means you could cash out your I bonds and move the money into a top-paying CD to instantly boost your interest rate by 1 to 2 percentage points. This has the added advantage of predictability, since unlike an I bond’s unknown future rate, CD rates are locked in and guaranteed for the full duration of the certificate’s maturity term.
If you decide to swap your I bond funds for a CD, time is of the essence. That’s because the Federal Reserve has not only signaled it’s most likely finished with its rate-hike campaign, but also that 2024 is expected to see more than one Fed rate cut. As a result, CD rates have started to come down from the historic peak they reached in November and could continue softening. So it’s smart to lock in soon on the best CD rate that meets your financial timeline before returns diminish further.
Understanding the Penalty for I Bonds Redeemed Earlier Than Five Years
An important rule of I bonds is that they cannot be cashed in for any reason during the first 12 months. But once you’ve reached that one-year mark, you can withdraw any time you like. It’s true you’ll incur a penalty equal to the last three months of interest if your bond is less than five years old. But now that I bond rates have declined, the penalty hit is not especially severe.
Take for example an I bond purchased in September 2022. For the last three months, it has paid a rate of 3.38%, so three months of 3.38% earnings would be forfeited. But your previous interest payments, when the rate was 9.62% and then 6.48%, would not be impacted.
The First of the Month Is Best for Redeeming I Bonds
The U.S. Treasury always pays interest for the month right away on the first of the month, and not again until the first day of the next month. So once you’ve been paid interest for a particular calendar month, there’s no reason or additional earnings to be gained by holding the funds any longer during that month.
For anyone wanting to move their I bond funds elsewhere, waiting to withdraw on Feb. 1 will enable you to collect the new interest payment—and then as quickly as possible start earning interest on that money elsewhere, such as a CD or high-yield savings account. Even if you simply want to cash out and use your I bond funds, there’s no financial gain from waiting beyond the first of the month for your withdrawal.
How We Find the Best Savings and CD Rates
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000.
Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.