Hot takes on cash kings: I Bondsíl
Will a potential increase in inflation result in an upward adjustment of iBond rates on May 1?
U.S. Treasury I Bonds - cleverly named for always smashing inflation - aren't only a great stash for your moolah, but they'll keep you one step ahead of that pesky cost-of-living creep. Although the interest rates aren't jaw-dropping, these bad boys guarantee you won’t fall behind the inflation curve[1].
Here's the deal: The I Bond's variable interest component adjusts every six months, mirroring the ever-changing inflation trends. The next adjustment announcement is set for May 1[1]. Curious about whether Trump's tariff policy might trigger a boost in inflation and, consequently, I Bond rates? Here's the lowdown on that.
What's the skinny on May 1 I Bond rates?
Two weeks prior to the big announcement, we spilled the beans on the probable I Bond rate hike[2]. The good news: I Bond rates are expected to climb a whole percentage point up on May 1[2]. However, this increase isn’t linked to the tariff-induced inflation. Instead, rates are pegged to the previous six months' inflation data[4].
The April Consumer Price Index (CPI) report, which includes the March inflation numbers, is the last piece of the puzzle for the upcoming rate adjustment. Trump's tariffs were launched on April 2, 2025, which ensures that their impact won't reflect in the May 2025 increase[5].
So, the May 1 rate hike will be solely due to the inflation trends from October 2024 to March 2025. If you're curious about the specific rates, check out the table below:
| Issue Date | I Bond Rate ||----------------------------------|-----------------------|| October 2024 - March 2025 | 2.86% (annualized) |
There might be a future increase due to tariff-sparked inflation, but that won't surface until the November 2025 rate announcement. It’s tough to predict at this point whether November rates will be higher or lower than May rates since six months' worth of future inflation readings are tricky to forecast.
With the tariff environment being as volatile as a roller coaster, it's anyone's guess what the next six months of inflation trends will look like.
Heads up!
- If your bond's six-month adjustment cycle aligns with your purchase date, you'll start earning the May 1 rate in August 2025. For more information, read our breakdown of the next I Bond rate adjustment[6].
How much will a new I Bond pay?
Interestingly, the brand-new I Bonds you buy in May could yield a different rate than the ones purchased in April. The twist: an I Bond includes a fixed interest component in addition to the inflation-adjustable piece[4]. However, the Treasury doesn't reveal the calculation process for this, so we can't foretell the fixed-rate component for May 2025 bonds.
You have a chance to lock in the current fixed rate of 1.20% by securing a new I Bond before April 30, 2025. remember that starting the transaction a couple of days ahead of this date guarantees your purchase in April.
Alternatives to I Bonds
Feeling a craving for higher returns? In lieu of (or in addition to) I Bonds, stash some cash in top-notch CDs or high-yield savings accounts. While they don't adjust to offset inflation like I Bonds, their rates are sizzling hot right now[3]. Rates currently outpace the 2.4% inflation rate[3]. Check out our daily rankings of the finest CDs and savings accounts:
- Best 3-Month CD Rates
- Best 6-Month CD Rates
- Best 1-Year CD Rates
- Best 18-Month CD Rates
- Best 2-Year CD Rates
- Best 3-Year CD Rates
- Best 4-Year CD Rates
- Best 5-Year CD Rates
- Best High-Yield Savings Accounts
- Best Money Market Accounts
The fine print
- The quoted top rates are the highest ones Investopedia identified in its research of over two hundred banks and credit unions offering CDs and savings accounts nationwide[7]. These rates significantly outshine the national averages, which encompass banks with pitiful interest payouts[7].
How Investopedia finds the cream of the crop
Day after day, Investopedia tracks the rate data from more than two hundred banks and credit unions that cater to customers nationwide in search of top-performing CDs and savings accounts. To qualify for our rankings, an institution must be insured by either the FDIC or the NCUA and have initial deposit requirements of no more than $25,000. Minimum deposits cannot exceed $5,000[7].
Banks must be accessible in at least 40 states to qualify as nationally available, and credit unions can't demand donations exceeding $40 to join*[8]. For more details on our selection criteria, read our full methodology.
*Note that some credit unions require donations to attain membership if you don't meet other eligibility requirements, such as residing in a specific location or working in a particular job.
[1] - https://www.treasurydirect.gov/indiv/products/products_ibonds_5yr.htm[2] - https://www.investopedia.com/articles/personal-finance/041115/investopedia-calculates-next-i-bond-rate.asp[3] - https://www.investopedia.com/terms/i/inflation.asp[4] - https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibuy.htm[5] - https://www.investopedia.com/articles/personal-finance/041115/investopedia-calculates-next-i-bond-rate.asp[6] - https://www.investopedia.com/articles/personal-finance/041115/investopedia-calculates-next-i-bond-rate.asp[7] - https://www.investopedia.com/articles/investing/100215/americas-best-high-yield-savings-accounts.asp[8] - https://www.investopedia.com/terms/e/eligiblereservedfund.asp
- The initial fixed rate component of an I Bond purchased in May could be different from the one bought in April, as revealed on Investopedia.
- By securing a new I Bond before April 30, 2025, you can lock in the current fixed rate of 1.20%.
- If you're searching for higher returns, consider top-performing CDs or high-yield savings accounts as an alternative to I Bonds, as their rates currently outpace the 2.4% inflation rate.
- The tariff environment being as volatile as a roller coaster, it's unclear whether the November 2025 I Bond rates will be higher or lower than May rates, as they depend on six months' worth of future inflation readings.
- The May 1 rate hike for I Bonds won't be influenced by Trump's tariff policy, as the tariffs were launched on April 2, 2025, which ensures that their impact won't reflect in the May 2025 increase.
