Series I Savings Bonds and Interest Rates

Key Takeaways

• Buy I Bonds by October 25th (not October 31st) to lock in the current 9.62% rate, since purchases are effective the next business day
• Plan to hold I Bonds for at least 12-15 months minimum—you cannot withdraw funds in the first year, and early withdrawal within 5 years costs you 3 months of interest as a penalty
• Maximize the $10,000 annual limit by using multiple entities: you can purchase $10,000 each for yourself, spouse, revocable living trust, and business LLC, allowing couples to buy up to $40,000 per year
• Buy I Bonds toward the end of the month and sell toward the beginning of the month to capture full months of interest—Treasury Direct applies monthly interest rates uniformly regardless of purchase/sale date within that month
• Use I Bonds as a long-term emergency fund replacement for savings accounts and CDs, since they're designed to keep pace with inflation unlike traditional savings vehicles offering only 0.60% average rates