November Savings Bond Rates - Record High I Bond Inflation Rate of 7.12%

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The Treasury released the new I Bond and EE Bond rates today. New rates are announced on every first business day of May and November.

I Bond Rates for New Purchases

As I had calculated on October 13th, the I Bond inflation rate is 7.12% (annualized). This is the highest inflation rate since the I Bond was introduced in 1998. Before today, the highest I Bond inflation rate was 5.70% that was set in November 2005. The list below shows the five highest I Bond inflation rates. The full history of I Bond rates can be viewed at this TreasuryDirect page.

Five Highest I Bond Inflation Rates

  1. 7.12%, November 2021
  2. 5.70%, November 2005
  3. 4.92%, November 2008
  4. 4.84%, May 2008
  5. 4.60%, May 2011

As I had expected, the I Bond fixed rate remains at 0.00%. The zero fixed rate has been common for I Bonds in this type of interest rate environment. During the seven years from 2008 to 2015 when the Fed held rates near zero, the I Bond fixed rate had been set to zero eight out of the 14 six-month periods.

With an I Bond inflation rate of 7.12% and a fixed rate of 0.00%, the I Bond composite rate is easy to calculate. It’s equal to the inflation rate of 7.12%.

Summary:

I Bond Rates:
Composite Rate: 7.12%
Fixed Rate: 0.00%
Inflation Rate: 7.12%

EE Bond Rate: 0.10% (EE Bond is guaranteed to double in value in 20 years)

Rates effective Nov 1, 2021 through Apr 30, 2022

The I Bond composite rate is very high compared to today’s CD rates from online banks, but it’s important to remember that the inflation rate on the I Bond changes every six months. Even if future inflation numbers go back to normal, that would still result in a competitive return for I Bonds over the next couple of years.

For those looking for a safe inflation hedge, I Bonds are a good choice. One nice thing about I Bonds is that the composite rate is guaranteed never to fall below zero. So if we get a period of deflation (which has occurred after periods of high inflation), the I Bond composite rate will never be lower than zero. That’s an advantage over Treasury TIPS which can go negative. With current TIPS yields, I Bonds are currently a much better deal. The primary downside of I Bonds is the purchase limit. The maximum that an individual can purchase per year is $10,000 at TreasuryDirect and $5,000 in paper bonds purchased with an IRS tax refund (There are ways to buy more I Bonds. Harry Sit of The Finance Buff has a useful review of how a married couple could buy up to $65,000 in I Bonds in one calendar year by using business accounts and trust accounts.)

I Bond Rates for Current I Bond Holders

I Bonds purchased in the past will get six months of this new inflation rate. The start of this six-month period depends on when you purchased the I Bond. An I Bond's new inflation rate takes effect every six months after its issue month.

Here are a few examples of when the new I Bond inflation rate will take effect on old I Bonds. If you purchased I Bonds in April 2012 and October 2014, the 7.12% inflation rate won't take effect on those I Bonds until April 2022. If you purchased I Bonds in July 1999 and January 2000, the 7.12% inflation rate won’t take effect on those I Bonds until January 2022. For more details, please refer to this Treasury Direct page.

Composite I Bond Rate = 10.23% to 10.85% for I Bonds Purchased before Nov 2001

Those who purchased I Bonds from September 1998 through October 2001 have a fixed rate that ranges from 3.00% to 3.60%. Those I Bonds will have a composite rate for six months that ranges from 10.23% to 10.85%.

The following list shows the five highest composite rates that will occur on past I Bond purchases. These are active I Bonds that were purchased before November 2002.

Five Top I Bond Composite Rates

  • 10.85% (3.60% fixed rate, issued May 00 - Oct 00)
  • 10.64% (3.40% fixed rate, issued Sep 98 - Oct 98, Nov 99 - Apr 00, Nov 00 - Apr 01)
  • 10.54% (3.30% fixed rate, issued Nov 98 - Apr 99, May 99 - Oct 99)
  • 10.23% (3.00% fixed rate, issued May 01 - Oct 01)
  • 9.19% (2.00% fixed rate, issued Nov 01 - Apr 02, May 02 - Oct 02)

EE Bond Rates

Yet again, the Treasury kept the EE Bond rate the same at 0.10%. With this low rate, in my opinion, the only reason to purchase an EE Bond is if you’re planning to hold it for 20 years. In that case, the EE Bond is guaranteed to double in value. This is equivalent to an annual return of about 3.5%, which is much higher than the current yield of the 20-year Treasury bond (1.98% at Friday’s market close).

Overview of Series I Savings Bond Features

Below is a summary of the I Bond features. More information is available at this 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
  • New rates announced every six months on November and May 1st
  • 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
  • Maximum purchases per calendar year and per social security number is $10,000 in TreasuryDirect and $5,000 in paper bonds purchased with IRS tax refunds (See The Finance Buff postabout extending limits via trust/business purchases)

Comments


#1 - This comment has been removed for violating our comment policy.
buckeye61
  |     |   Comment #5
Seems pretty safe to say that the ibond rates will continue to be attractive for the next 12 to 18 months at least, and remember you can withdrawal after 12 months with a 3 month interest penalty.
CuriousDave
  |     |   Comment #18
The penalty is interest earned in the last three months the bonds are owned, If the rate for the seventh through twelfth months is still significantly higher than CD rates and the rate for the six months after that drops low enough, it may make sense to keep the bonds for 15 months instead of 12. That way one earns higher interest for months 9 through 12 which would otherwise be forfeited, and the loss of interest for months 13 through 15 will be relatively small. Investors initially planning to hold their bonds for only 12 months should keep an eye on future rates ro figure whether a 15 month holding  will make sense for them.
gregk
  |     |   Comment #38
Very astute advice. Thank you.
w00d00w
  |     |   Comment #6
the velocity of CPI-U measured inflation has slowed substantially. month over month, it ranged 0.8-0.93% in the April-June timeframe. most recent two months, 0.21-0.27%. if it maintains that recent pace over the next 6 months, the next I Bond inflation rate would be in the 2.5-3.5% range
Choice
  |     |   Comment #29
With the October CPI out today…even if inflation/CPI is flat through March 2022, the May 2022 ibond rate would be in the neighborhood of 1.7% for the then following 6 months for new issue and resets for older ibonds
buckeye61
  |     |   Comment #30
0.9% for October. Inflation is getting ugly, but this will increase the likelihood that the May i-bond rate will continue to be historically high.
Beef
  |     |   Comment #9
I still have paper I bonds from 2000 and 2001. When I look up my bond inventory, it shows the interest as only 7.20%. Shouldn't this be around 10%? Other I bonds from after 2003 appear to have the correct interest rate. Did Treasury decide to change the formula for older bonds because the interest rate would be too high? The posted rate on the Treasury website indicates 10%, but I am using the bond inventory tool they provide.
alan1
  |     |   Comment #10
Beef- The interest rate is dependent on the _month_ in which you bought the savings bond. For example, a bond purchased in April 2001 is currently earning 7.00%. In April 2022, it will begin earning 10.64% for a six-month period.

Using the Treasury Direct calculator, you can calculate the value as of various months in the past and future, bu changing the date in the "Value as of:" field, and clicking on "Update".
https://www.treasurydirect.gov/BC/SBCPrice
alan1
  |     |   Comment #11
and to answer your question, "Did Treasury decide to change the formula for older bonds because the interest rate would be too high?":

Treausry did NOT "decide to change the formula for older bonds because the interest rate would be too high" AND it did NOT "decide to the change the formula for older bonds" for any other reason. Treasury did NOT "change the formula for older bonds", or any other Series I savings bonds.
alan1
  |     |   Comment #16
1. I went to https://www.treasurydirect.gov/BC/SBCPrice
2. In the "Series" field, I clicked on "I bonds"
3. In the "Issue Date" field, I entered "04/2001"
4. I clicked on "Calculate", which took me to a new screen that showed an "Interest Rate" of 7.00%
5. In the "Value as of" field, I entered "04/2022"
6. I clicked on "Update", and the calculator showed an "Interest Rate" of 10.64%

Much quicker to do it than to type out the steps.
GreenDream
  |     |   Comment #12
Short answer is: No, they did not change the formula.

looking at the following chart
https://www.treasurydirect.gov/indiv/research/indepth/ibonds/IBondRateChart.pdf

I'm guess they were issued in the June to October 2000 timeframe. I suspect the next time your 7.2% bonds reach a rate update (happens every six months from the month issued), they'll be 10.85% bonds.
JimDavis
  |     |   Comment #13
The day the US Treasury changes the rules on an existing bond, is the day I move to the Fiji Islands
P_D
  |     |   Comment #14
You don't have to worry about their changing the rules on an existing bond. They won't ever bother doing that. They will just keep stamping out more trillion dollar fake money coins to pay you back with until the dollar, your bonds, your cash and all your other assets are worthless like they are doing right now. There is no evidence that any change in the government's reckless spending and debt strategy is in sight. In fact it just the opposite and it has stepped on a rocket. So why would they need to change the rules when they can simply gut your bonds without changing anything.
Choice
  |     |   Comment #17
Starting with the unfunded tax cuts in 2017 the government continues its reckless spending. Oh, don’t forget the stimulus in December 2020. What a trend that was started last year
kcfield
  |     |   Comment #19
PD: "On Jan. 8, 1835, all the big political names in Washington gathered to celebrate what President Andrew Jackson had just accomplished. A senator rose to make the big announcement: "Gentlemen, the national debt is PAID" (source: NPR).  Unfortunately, that was the last time the federal debt was paid off, and the "elephant in the room"--now at nearly 29 trillion dollars, has been ignored by both major parties in recent years. While one party may be the more flagrant deficit spenders; the other party is at least equally culpable because they too, more surprisingly, have chosen to deprioritize the massive federal debt,. Thus, the responsibility for high inflation, low savings rates, and the astronomical debt falls upon both parties--for reasons that are beyond the scope of this website and this post.
GreenDream
  |     |   Comment #20
"They will just keep stamping out more trillion dollar fake money coins"

While some "experts" have suggested doing such a thing, no trillion dollar coins have been minted, yet.
Choice
  |     |   Comment #27
Jim, should have moved earlier…bonds use to be backed by, and exchanged into, gold and earlier into silver, too.
gregk
  |     |   Comment #22
POD beneficiaries are disallowed on all TreasuryDirect.gov accounts, right?
Choice
  |     |   Comment #23
Very broad ? “All” … No. Go to the treasury site and you’ll see trusts and business accounts the answer is—-not allowed. Individuals, yes, in most other cases they are allowed or as joint owner.
alan1
  |     |   Comment #24
gregk -- from Treasury Direct "Registering a Savings Bond: Series I":

Registrations for Individuals
Three basic registrations exist for individuals.
[snip]
Owner and beneficiary
Only the owner may make transactions. If he or she dies, the beneficiary becomes the only owner. The beneficiary can’t be an entity.
The registration says “PAYABLE ON DEATH,” or “POD.”
Example of registration: JOHN DOE POD TO JANE DOE
https://www.treasurydirect.gov/indiv/research/indepth/ibonds/registeringibonds.htm
gregk
  |     |   Comment #26
Yeah, thanks, - I should have examined the website more carefully.

Here's another question:

Suppose I solely own $10K in Series I bonds purchased in November.

Can my wife purchase $10K of I bonds for herself before year end as primary owner and me be subsidiary joint owner? Would that trespass my $10K per year purchase limit, or would the fact of my tax ID not being primary on the account make this allowable?
alan1
  |     |   Comment #28
gregk -- from Treasury Direct:

How does the limit apply to bonds held in co-ownership form?
The limit applies to the SSN of the first-named registrant of a savings bond. This registrant is considered the primary owner of the bond, whether it is issued in paper or electronic form. The second-named registrant may purchase additional securities, up to the annual limit, if that registrant is the primary owner of the additional bonds.
https://www.treasurydirect.gov/indiv/research/faq/annualpurchaselimitchangeqa.htm

And sincere thanks to gregk for bringing this thread back to the topic of Series I bonds, following multiple attempts (one was deleted) by P_D to troll the thread by ****posting political screeds and succeeding in diverting the discussion and terminating discussiion of savings bonds for quite a while (with the customary assist from kcfeld).
Choice
  |     |   Comment #25
And Treasury form 5336 is a good Plan B to have ibonds distributed up $100k when no local court administrations post death…use for sole proprietorship business accounts too.
Choice
  |     |   Comment #35
From today’s WSJ… “In New York and California, simply having a will is insufficient. In California, if the deceased has only a will and has more than $166,000 in assets (outside of certain asset classes), then you are required to go to probate court. If you have real estate, you almost always must go unless you have a trust (or if the real estate is worth $50,000 or less).” And, I recall an earlier reference to the higher number from a TD rep that it would honor
Choice
  |     |   Comment #36
Just did a dry run or ”what if” scenarios for year-end tax planning…and…for those anticipating using a tax refund to buy up to $5k in additional ibonds early next year …suggest paying close attention as to whether or not you can get them for your TD account or in paper form. Some of the government language out there is a little ambiguous but to me it appears that one must buy paper ibonds (which can be converted later to a TD account) with the refund and that is the only way to get the so-called $5k kicker. On the other hand having the refund used to purchase ibonds for your TD account appears to have that amount be counted against the $10k limit for each account for the year…clear as mud.
Chas00440
  |     |   Comment #31
Really wish you hadn't changed the post. A lot of useful information was lost.
Choice
  |     |   Comment #32
Thanks, Newbie. If useful, why don’t you eliminate any so-called objectionable material and repost the “useful info” that you assert was also there.  Remember the risk of including good/bad is a risk to whole post being deleted. However I do recall where the phantom moderator did excise/modify a post. Thanks
CalBear49
  |     |   Comment #33
You can get around the $10K annual limitation for I-Bond purchases if you have a Family Living Trust. You can set up a Treasury Direct account in your own name and also a separate account in the name of your Trust, and purchase $10K of I-Bonds for each, even if you use your own SSN for both accounts. I confirmed this with two separate reps at Treasury Direct.
Choice
  |     |   Comment #34
Good point and the November CPI published today bodes well of a nice trend for a new/high ibonds rate on May 1st.  Good parking lot until CD rates change (soon)
Choice
  |     |   Comment #37
Saw the following from an ibond blog posting…has anyone come across this and/or went to TD or Treasury on conflict? Q/A

"How much in I bonds can I buy as gifts?

"The purchase amount of a gift bond counts toward the annual limit of the recipient, not the giver. So, in a calendar year, you can buy up to $10,000 in electronic bonds and up to $5,000 in paper bonds for each person you buy for."

The above is the last q/a at
https://treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_ibuy.htm#gift

This q/a would strongly suggest one could buy up to $15K in tax refund paper bonds but only for the 3 entries on form 8888. Of course the instructions for 8888 are more limiting
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