Series I Savings Bond Rate Update May 2025

The United States Treasury set a new interest rate for Series I United States Savings Bonds. From May 1, 2025 through October 31, 2025:

• the fixed rate for new savings bond purchases is 1.10% (down from 1.2%); and
• the semi-annual, inflation-indexed rate is now 1.43%.

Series I Savings Bonds purchased between now and October 31, 2025 will earn interest at an annualized rate of 3.98% for six months following their purchase.

Series I Savings Bonds that you currently own will continue to earn interest at their base rate, plus the new inflation rate. For example, savings bonds purchased between November 1, 2023 and April 30, 2024 will now earn a composite rate of 4.18% (a 1.30% fixed rate plus the new 1.43% nflation-indexed rate).

A slightly lower, but still strong fixed rate

Although the fixed portion of this rate is slightly lower, it's still significantly higher than the fixed rate on savings bonds purchased between 2008 and most of 2023. If inflation rises again over the next 30 years, bonds that you buy now could earn significantly more later.

On the other hand, a period of deflation (falling prices) means that your Series I Bonds would earn the base rate and nothing more. The Treasury department has a 0% floor for savings bonds. If your base rate is zero and the inflation rate is negative, you wouldn't lose money, but neither would you earn any.

That sharp jump in the inflation-indexed portion of the savings bond rate suggests that inflation is back. I suspect that's because tarriff fears are causing consumers to shift demand forward. Lots of people and companies are buying now because tarriffs will make it more expensive to buy later.

Should you buy Series I bonds?

Remember that if you redeem your savings bonds within five years of their purchase date, you forfeit the last three months of interest. You'll also owe a little more in federal taxes at tax time. I still think it's a good idea to redeem I bonds with a 0% fixed rate and purchase ones with a higher base rate or move to cash.

You can find online bank accounts that pay more interest and offer greater liquidity. Unlike savings bonds, however, that interest is taxable at the federal and state levels. With savings bonds, you can choose when to pay taxes on your interest earned (every year, or when you withdraw your cash).

Given our incoming economic slow down, I think I'd choose the greater liquidity of a savings account. Another option is to keep your cash in a money fund, often called a money market fund. A money fund is a type of mutual fund that invests in instruments with short maturity terms such as treasury bills.

Disclaimer

As always, remember: I'm not a financial professional, I just read a lot. Don't be afraid to consult a financial advisor.