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The clock is running out on I bond’s record-high interest rate. As of Nov. 1, 2022, the current rate of 9.62 percent will drop. But you'll need to purchase I bonds by Oct. 28 to take advantage of the current rate.
Released by the Treasury Department and backed by the federal government, Series I Savings Bonds provide a rate of return based on inflation. They’re a safe way to hedge against a volatile economy that protects your nest egg. But how do I bonds work, and what happens when the rate drops?
How I Bonds Work
I bonds earn monthly interest. The interest is compounded semiannually. This means that the bond interest rate, in this case, 9.62 percent, is applied to a new principal every six months. The new principal is the sum of the interest earned and the prior principal.
Anne Johnson was a commercial property and casualty insurance agent for nine years. She was also licensed in health and life insurance. She went on to own an advertising agency, where she worked with businesses. She has been writing about personal finance for 10 years.
