How to Calculate the New 2022/2023 I Bond Rates

00:00 Intro
00:09 New I Bond Rate
00:39 I Bond Basics
01:13 Calculate Interest Earned
01:45 Sell I Bonds Early
02:08 May 2023 Rate
03:57 I Bonds vs T Bills

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Well, it’s official, the 9.62% IBond interest rates are over and in this video I’ll talk about if it’s still a good time to buy I Bonds and how to calculate the new IBond interest rates.

I Bonds rates change every 6 months and the new rate for I bonds issued from November 2022 through April 2023 is 6.89%.

I Bonds rates are calculated by adding the fixed rate to the inflation rate.
The fixed rate is .4% and the inflation rate is 6.49%, this equals the composite rate of 6.89%.

The next rate will be set next May 2023 and will be based on inflation rates. So if inflation goes down, then the next rate will decrease as well.

So is it still worth it to buy I Bonds?

You will get the new interest rate for 6 months after you purchase the bonds, it won’t change in the middle of your year just because the rates change so you can still lock in a high rate.

Also, remember that you have to hold them for at least 12 months and if you sell before 5 years then you forfeit the last 3 months of interest.

So let’s look this example:
$10,000 worth of I bonds bought on Oct 28th at 9.62%

1st 6 months - $481.00 interest earned
- $10,000 x 9.62/2 = $10,481

2nd 6 months - $361.00 interest earned
- $10,481 x 6.89%/2 = $10,842.

The total for the year will be $842 in interest or 8.42%

So we just need to compare these rates to what we can get elsewhere. Most high interest savings accounts right now are about 2.72%, CDs are around 3-4% and a 52 week T-bill is 4.5%.

We can see that even if the new I bond rate went down to 3%, you’re still earning decent interest even if you have to sell after 12 months and forfeit 3 months of interest.

It’s also important to remember the purpose of these bonds, and that is that these are an inflation hedge. So if inflation does go up, your rate will also increase which might make you feel a little better next time you’re at the pump or grocery store.

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