Buyers snap up U.S. Treasury I bonds before interest rate deadline
Buyers snap up U.S. Treasury I bonds before interest rate deadline
Friday is the last day to buy a so-called I bond and lock in a 9.62% annualized interest rate for the next six months. I bonds are inflation-adjusted savings bonds issued by the U.S. government. Their interest rate changes every six months, in May and November.
Normally, when inflation is low, they’re not all that popular because they don’t offer a great rate of return. But right now — with inflation as high as it is and the stock market volatile — they’re quite popular.
So much so that the Treasury Department’s website, which is the only place to buy I bonds, has been overwhelmed in the last couple of days as investors rushed to benefit from the high rate before it changes next week.
Around noon Eastern on Friday, Jennifer McKinnon was trying to log into her Treasury account.
“Let’s see if this actually works. I doubt it,” she said. McKinnon was right — it didn’t. “Man! Why can’t I type in anything?”
McKinnon lives in New York and works in real estate. She already bought some I bonds a couple of weeks ago but was hoping to buy more before the deadline and get her family and friends to buy them too.
“I have told so many people about this where I feel like the Treasury owes me a commission,” McKinnon said. Individuals can buy up to $10,000 in electronic I bonds during a calendar year.
Before this year of high inflation, “not many people really paid much attention to I bonds,” said Giang Nguyen, a finance professor at Penn State. “But now that we suddenly find ourselves in a very high inflation environment and most investments out there are losing value, that’s why you see the rush.”
There’s pretty much nowhere else to get such a high rate of return guaranteed.
“This year has been really tricky for anyone trying to save for the future,” said Winnie Cisar at the research firm CreditSites.
She just bought I bonds for everyone in her family.
“There’s still a lot of uncertainty around the economy — what are equities going to do, what is inflation going to do?” she said. “And it felt like a pretty compelling opportunity.”
Next week, the interest rate on I bonds will drop from 9.62% likely to about 6.5%, Cisar said.
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