Is the I Bond rate really 0%?

There have been a few questions whether or not the new I Bond rate is really 0%, or if that means there is no difference in rates from last time. Unfortunately, it means the rate your I Bonds will be earning is in fact 0%. If your bond is earning 5% right now, it will be dropping to 0% in the coming months.

Existing I Bonds will adjust to the new rate some time between May and October depending on when you purchased the bond. On the first day of the bond's 6 month anniversary of purchase, the bond will drop down to earning 0% for 6 months. It is the equivalent of having cash in your pocket for 6 months.

Thinking of selling? You should remember that I Bonds MUST be held for at least one year. Additionally, there is a penalty of 3 months of interest for redeeming within 5 years. If you want to sell a bond that is less than 5 years from issue, wait until the bond is 3 months into the 0% rate. That way, when you redeem the bond, the penalty is the past three months of 0% interest, meaning you lose no value as part of the penalty.