The U.S. Department of the Treasury has announced a new interest rate of 3.98% for Series I savings bonds, effective from May 1 through October 31, 2025. This updated rate, which combines a fixed portion of 1.10% and a variable portion of 2.86%, reflects a modest increase from the previous 3.11% but remains lower than the 4.28% offered in the six months leading up to October 2024. The change comes as the Treasury continues to adjust I bond yields in response to inflation data, aiming to provide a relatively stable investment option for savers amid ongoing economic uncertainty.
Series I bonds, which are designed to protect against inflation, reached a peak yield of 9.62% in May 2022 during a period of surging prices. Although the yield has dropped considerably since then, the fixed-rate component—once again over 1%—may still be attractive to long-term investors, particularly those seeking safety amid recent market volatility and recession concerns. The fixed rate, which remains constant after purchase, is determined by the Treasury without public disclosure of its calculation method, while the variable rate is tied directly to inflation and changes every six months based on consumer price data.
For current I bond holders, the new rate will only apply after the initial six-month holding period ends, based on their bond purchase date. For example, someone who bought I bonds in March 2025 will continue to receive the previous rate until September, at which point their bonds would adjust to the newly announced rates, resulting in a composite return of 4.06%. As economic conditions evolve, the Treasury will issue the next rate update in November, continuing its biannual tradition of recalibrating yields to align with inflation trends.
Despite the rate being lower than some previous peaks, experts suggest that the stability of the fixed-rate component and the protection against inflation make I bonds a prudent option for conservative investors looking to preserve capital. The updated figures serve as a reminder of how inflation impacts even the safest investments and highlight the importance of monitoring Treasury announcements to make informed financial decisions.
