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2022 I Bonds Were Wildly Popular—But Things Have Changed

2022 was a historic year for I bonds. After unveiling a rate of 7.12% in November 2021, the U.S. Treasury-issued bonds moved to an even higher rate in May 2022, offering a whopping 9.62%—the highest initial rate I bonds 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.

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 between November 2021 and October 2022 has fallen to 3.38% or 3.94%, depending on the month the I bond was purchased.

If you were one of the many who bought bonds during this period, it means you can earn significantly more by moving your money to a top-paying CD. In fact, today's best nationwide CDs are offering up to 5.75% APY, with options to earn above 5% in every term up to 3 years. CD rates you can lock in for 4 or 5 years are also out-paying I bonds, with top rates in the mid-4% range.

Not only that, but a CD's rate is predictable and guaranteed. I bond rates change every 6 months—and when inflation comes down, so too do I bond rates. That means there's no way to know what your I bond will earn in the future. A CD rate, however, is locked in for your entire term, no matter what happens with inflation, or what the Federal Reserve does to interest rates.

While it's true that cashing in any I bond that's less than five years old will trigger an early withdrawal penalty, the penalty is reasonably mild for most current I bond holders. So what you give up will likely be outweighed by both the gains from your new, higher rate and the added predictability of your future returns.

What Your Particular I Bond Is Paying Right Now

Every I bond's rate is pegged to the month the bond was issued. So purchasing an I bond on any day in, say, October 2022, would have the same Oct. 1, 2022 issue date. In this example, your first interest payment would be on Nov. 1, 2022, and you would receive six interest payments at your initial rate. After that, you'd receive 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 March 1.

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 four months of this time period, or 3.38% for those who bought in the last two months of the window. (Those in the last two months will also earn 3.94%, once they move into their next six-month rate period.)

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 Mar. 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%	3.94%
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 further took off after the May 2022 rate announcement of 9.62%. It was the highest initial rate ever offered on an I bond, and the return 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 period, earning 9.62% initially and then later 6.48%.

But like those who purchased six months earlier, the rate you'll earn on March 1 is now down to 3.94% if you purchased between May and August 2022, or 3.38% if you purchased in September or October 2022. (Again, those in the last two months will start earning 3.94% once they've collected 3.38% for a full six months.)

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 Mar. 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%	3.94%
Sep 2022	9.62%	6.48%	3.38%	3.94%	3.38%
Oct 2022	9.62%	6.48%	3.38%	3.94%	3.38%

Today's Best CDs Make It Easy to Out-Earn I Bonds

An I bond paying less than 4% is no longer an especially competitive savings vehicle. Though it's possible I bond rates could rise in the near future, the next I bond rate is never known more than a few weeks before the next 6-month announcement (the next of which will be May 1). Given that the Federal Reserve remains committed to bringing inflation further below its current level, the likely trajectory for I bond rates is that they will continue to fall in 2024 and 2025.

But 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 5.75% APY. This means cashing out your I bonds and moving the money into a top-paying CD could instantly boost your interest rate by 1 to 2 percentage points.

How the I Bonds Penalty Works

I bonds cannot be cashed in for any reason during their first 12 months. But once you've reached your one-year anniversary, you can withdraw any time you like. It's true that if you have not held the bond for at least five years, you'll incur a penalty equal to the last three months of interest. But with I bond rates now so much lower, the penalty hit is not especially severe.

For example, an I bond purchased in October 2022 has been paying a rate of 3.38% for the last several months, so three months of 3.38% earnings would be forfeited. But your previous interest earnings, when the rate was 9.62% and then 6.48%, are not impacted.

Redeem Your I Bonds on the First of the Month

Monthly I bond interest payments from the U.S. Treasury are always paid right away on the first day, and not again until the first of the next month. So once you've collected interest for a particular calendar month, say on the upcoming March 1, there's no reason or additional earnings to be gained by holding the funds any longer during March.

Also, if you're going to move your I bond funds elsewhere, withdrawing on March 1 allows you to receive the March interest payment and then as quickly as possible start earning interest on that money elsewhere, such as a CD or high-yield savings account. By moving quickly, you can collect March interest on your money in two different places.

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.