Savings I Bonds May 2019 Interest Rate: 1.40% Inflation + 0.50% Fixed Rate

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Update 5/1/19. The fixed rate will be 0.50% for I bonds issued from May 1, 2019 through October 31st, 2019. This is the same as it was for the last 6 months. The variable inflation-indexed rate for this 6-month period will be 1.40% (as was predicted). The total rate on any specific bond is the sum of the fixed and variable rates, changing every 6 months. If you buy a new bond in between May 2019 and October 2019, you’ll get 1.90% for the first 6 months. See you again in mid-October for the next early prediction for November 2019.

Original post 4/11/19:

Savings I Bonds are a unique, low-risk investment backed by the US Treasury that pay out a variable interest rate linked to inflation. You could own them as an alternative to bank certificates of deposit (they are liquid after 12 months) or bonds in your portfolio.

New inflation numbers were just announced at, which allows us to make an early prediction of the May 2019 savings bond rates a couple of weeks before the official announcement on the 1st. This also allows the opportunity to know exactly what a April 2019 savings bond purchase will yield over the next 12 months, instead of just 6 months.

New inflation rate prediction. September 2018 CPI-U was 252.439. March 2019 CPI-U was 254.202, for a semi-annual increase of 0.70%. Using the official formula, the variable component of interest rate for the next 6 month cycle will be 1.40%. You add the fixed and variable rates to get the total interest rate. If you have an older savings bond, your fixed rate may be very different than one from recent years.

Tips on purchase and redemption. You can’t redeem until 12 months have gone by, and any redemptions within 5 years incur an interest penalty of the last 3 months of interest. A known “trick” with I-Bonds is that if you buy at the end of the month, you’ll still get all the interest for the entire month as if you bought it in the beginning of the month. It’s best to give yourself a few business days of buffer time. If you miss the cutoff, your effective purchase date will be bumped into the next month.

Buying in April 2019. If you buy before the end of April, the fixed rate portion of I-Bonds will be 0.50%. You will be guaranteed a total interest rate of 2.82% for the next 6 months (0.50 + 2.32). For the 6 months after that, the total rate will be 0.50 + 1.40 = 1.90%.

Let’s look at a worst-case scenario, where you hold for the minimum of one year and pay the 3-month interest penalty. If you theoretically buy on April 30th, 2019 and sell on April 1, 2020, you’ll earn a ~2.06% annualized return for an 11-month holding period, for which the interest is also exempt from state income taxes. Comparing with the best interest rates as of April 2019, you can see that this is lower than a current saving rate or 12-month CD.

Buying in May 2019. If you buy in May 2019, you will get 1.40% plus a newly-set fixed rate for the first 6 months. The new fixed rate is unknown, but is loosely linked to the real yield of short-term TIPS. In the past 6 months, the 5-year TIPS yield has dropped from 1% to about 0.5%. My best guess is that it will be 0.20%. Every six months, your rate will adjust to your fixed rate (set at purchase) plus a variable rate based on inflation.

If you have an existing I-Bond, the rates reset every 6 months depending on your purchase month. Your bond rate = your specific fixed rate (set at purchase) + variable rate (minimum floor of 0%).

Buy now or wait? In the short-term, these I bond rates will definitely not beat a top 12-month CD rate if bought in April, and most likely won’t if bought in May either unless inflation skyrockets. Thus, if you just want to beat the current bank rates, I Bonds are not a good short-term buy right now.

If you intend to be a long-term holder, then another factor to consider is that the April fixed rate is 0.5% and that it will likely drop at least a little in May in my opinion. You may want to lock in that higher fixed rate now.

Honestly, I am not too excited to buy either in April or May, but if I really liked the long-term advantages of savings bonds (see below), I would consider buying now in April rather than May due to my guess of a higher fixed rate. You could also wait, as things might change again during the next update in mid-October. For my own accounts, as I am now semi-retired and thus no longer a big saver looking for any tax-deferred space possible, I will probably just buy TIPS in other accounts instead since the real yield is similar.

Unique features. I have a separate post on reasons to own Series I Savings Bonds, including inflation protection, tax deferral, exemption from state income taxes, and educational tax benefits.

Over the years, I have accumulated a nice pile of I-Bonds and now consider it part of the inflation-linked bond allocation inside my long-term investment portfolio.

Annual purchase limits. The annual purchase limit is now $10,000 in online I-bonds per Social Security Number. For a couple, that’s $20,000 per year. Buy online at, after making sure you’re okay with their security protocols and user-friendliness. You can also buy an additional $5,000 in paper bonds using your tax refund with IRS Form 8888. If you have children, you may be able to buy additional savings bonds by using a minor’s Social Security Number.

For more background, see the rest of my posts on savings bonds.

[Image: 1946 Savings Bond poster from US Treasury – source]

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  1. Moe Howard says

    In my opinion, iBonds have to be a long term investment to make sense. I’ve been buying them since 90s so I have a solid fixed portion of my portfolio that is inflation protected. Using a draw down calculator, it’s about $1800 a month for 30 years state tax free.

    • I have also built up a nice stack of savings bonds over the years. I like that it serves as another reminder that steady annual savings, even if not that big, can really add up over time.

  2. The ads on this site are getting onerous. 4 ads scattered across one short article and all are the same image/advertisement. There was almost more space dedicated to ads than content in this one.

    • Thanks for the feedback. I turned on something called Google Auto ads which changes things up dynamically. I don’t see that many ads right now, but I will see if I can limit the number of ads it places on any one article.

  3. I wish they still had the old SB Wizard to track all of this. The new tracking way of saving the html file is kludgy and error prone.

  4. I bought I-Bonds in April 2005 with a fixed rate portion of 1.00%. This was at a time when you could buy both paper and electronic through Treasury Direct for a maximum of $60K a year. Over the last 14 years they have averaged an annual compound rate of 3.3%. The accrued interest is not subject to the NH tax of 5% on interest and dividends. A potential downside to I bonds is their 30 year life for accruing interest. I will be 78 years old when they mature. Odds are good I could still be alive. When they mature I will be faced with having to redeem them and having a huge spike in my taxable income that year or they will sit and earn nothing. I believe the wisest choice for me would be to start unwinding my position in I-bonds slowly over the 10 years before they mature.

    • Susannah says

      I’m in a similar boat. I have some purchased in 2002. Part of me thinks I should hang on to them as long as possible as they are the best fixed-interest investment I’ve got going.

      The amount of interest I could lose could end up being more than the taxes might be. Every situation is different I suppose.

    • I would definitely look at the accumulated gains and then look to time cashing them out in the last 5 years or so when it won’t get taxed at a higher bracket.

      Keep in mind you might also have RMDs from IRAs, etc once you reach 70.5.

      • Susannah says

        Don’t we all wish we could predict the future. Had I known that I-bonds would be such good investment in 2002, I would have bought more of them. Thank you for your thoughts on this (was thinking the same thing).

        The only advantage to hanging on to an IRA is that it is bankruptcy protected which is something that any which one of us could face but, you’d still have your IRA.

        So, I guess the IRA would be last to liquidate if it comes to this.
        Many thanks again Jonathan!

  5. Jonathan

    What are your taughts today on whether to buy IBonds or stash it with Andrews 84mo CD ? I live in OR, my bracket is 12-15%. I cannot find a calculater to determine tax implications of CD vs savings w/ IBonds.

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