New series "I" savings bond rate effective 11-1-23

[TaxGuyBill]

I wonder what the highest amount of fixed rate has ever been.

3.6%, but that was a LONG time ago, in 2000.

https://treasurydirect.gov/files/savings-bonds/i-bond-rate-chart.pdf

[kathyc2]

I also purchased in 2022 with knowledge that I might want to take the 3-month penalty at some point to trade up to a better rate. However, if the inflation component goes back up, then the sacrifice will be more than $90, correct? It's always the last 3 months of interest earned that is forfeited, I assume.

Correct that the foregone interest is the last three months. I think people get held up too much on the word "penalty". The money needs to sit 3 months at no interest, similar to if a person had the money sitting in a checking account. Using Duke's example he earned $912 over 18 months. Disregarding compounding I calculate that he made an annual rate of around 6%. Doubtful that he could have had that return on any other no risk investment during that point in time.

I only do CD's at my CU. They may not have the absolute highest rate, but they are competitive. I can take out a new one online. They auto renew, but it's not generally at the best rate. After it matures, I just call and have them put the amount in my checking account. I never have to go into the branch.

My MM account is at American Funds. Again, all online for transactions.

[kathyc2]

3.6%, but that was a LONG time ago, in 2000.

I figured the fixed rate is related to Fed rate. It does, but quite loosely. Interesting that in early 2000's the fixed rate was higher than fed rate.



Since 2000 the combined rate is almost always higher than Fed rate, which is generally the most you can get on bank products.