I-bond yields are rising slightly as inflation cools, with the Treasury setting the new rate at 3.98%, according to the US Treasury Department. Wealth anchor Brad Smith breaks down what this means for savers and how I-bonds still stack up as a low-risk cash option.
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The Treasury Department announced new series I bond interest rates, as they do twice a year in May and November to reflect recent inflation data. The new annual interest rate is 3.98%, which includes a fixed rate of 1.10% and a variable rate of 2.86%. The fixed rate stays the same for the entire 30-year life of the bond, while the variable rate, that changes every six months to reflect changes in inflation. Now, the total 3.98% yield offered is up from the 3.11% yield that was offered since November 1st of 2024. But it is down from the prior year, and it's significantly fallen from the record high of 9.62% that was back in May of 2022. That is one downside of I bonds, the risk of lower returns down the line. So, now, you can redeem the bond before 30 years. You can start at 12 months in, but you'll lose some interest. Cashing in less than five years after the purchase, that's going to cost you three months of interest. Now, even though yields are lower today than they were in 2022, I bonds can still be a good place to park cash that you may not need right away.