Consider Redeeming your I Bonds
Now that inflation has dropped to less than 4% should you redeem your I Bonds?Most I bond purchasers should not cash out until the first day of the 16th month or 15 months and a day since partial month interest is not credited.
For example:
If you bought I bonds in October of 2022, you earnrd a full year of interest, taking into account the three-month penalty for withdrawal before the five-year mark, by waiting 15 months until January 2024 to redeem. Purchasers received 9.62% annual interest for six months. The composite interest earned was reduced to 6.48%, different than the headline 6.89% on new I bond purchases, due the differences in the fixed portion of the rate, which remains the same after purchase.
Annual interest for the next six months started paying investors 4.3% on May 1, 2023 down from interest they’ve paid out over the prior months. The forfeited interest for 3 months will be at this rate if the redemption is made in this period.
Questions & Answers