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How the New I Bond Rate Compares to CDs and Savings Accounts


On May 1, the Treasury Department announced the new I bond rate: 4.30%. While this rate is slightly lower than the record-breaking 9.62% rate Series I saving bonds saw in 2022, it’s currently on par with some of the best savings accounts and CDs.

Right now, top savings accounts and certificates of deposit are offering between 4.00% and 5.00% APY. And since the latest Federal Reserve rate hike, savings rates may get even better. If you’re looking for the best place to grow your money, I bonds, savings accounts and certificates of deposit are all low-risk, interest-earning options worth considering — but each has its own benefits and risks to consider.

Here’s where savings and CD rates stand for this week and how I bonds stack up to current savings rates.

Savings account rates remained the same after the Fed rate hike

All savings rates we track at CNET remained the same this week except for one. TAB Bank increased its savings rate from 4.40% to 4.76%, bringing the average for banks we track to 4.43%. Despite banks holding steady for this week, there’s a chance that your savings rate will get a little better in the coming weeks following the latest Fed rate hike.

CNET’s best savings rates this week

Bank Savings APY
UFB Direct 4.81%
TAB Bank 4.76%
Bask Bank 4.75%
CIT 4.75%
Bread Savings 4.76%

Rates as of May 8, 2023. 

Short-term CD rates increased, while longer terms stayed the same

The biggest difference we noticed across the CD rates we track at CNET was that the average rate for a six-month CD increased by 0.07% APY. Synchrony contributed to the big leap by raising the APY on its six-month CD from 4.25% to 5.00%. Rising Bank also boosted its six-month CD up to 5%. 

But the average 18-month CD rates CNET tracks dropped significantly, while longer CD terms remained the same, with little movement. 

Comparing CNET’s average CD rates

6-month 1-year 3-year 5-year
FDIC-tracked 1.03% 1.54% 1.34% 1.37%
CNET-tracked 4.35% 4.81% 4.22% 4.03%

Rates as of May 8, 2023. 

Is now the time to buy an I bond or CD?

The Treasury Department recently announced its latest I bond rate for the next six months — 4.30% APY. Though this rate is much lower than last year’s record high of 9.62% APY, it’s still on par with many savings options. So does it make sense to invest in an I bond right now? 

“If the Federal Reserve expects inflation to be under control within the next six months, as indicated by their recent ‘wait and see’ announcement, then longer-term CDs and bonds might be a good purchase,” said Forrest Baumhover, certified financial planner and founder of Teach Me Personal Finance

Bonds and CDs have a lot in common — competitive, guaranteed rates and withdrawal penalties if you take money out before a certain point. But I bonds work a little differently than CDs.

First, I bonds have two rates: a fixed rate that remains the same over the lifetime of the bond, and a variable rate that rises and falls in reaction to inflation. The fixed rate of an I bond is typically very low — in fact, up until recently, it was zero, said Scott Keller, chartered financial analyst and director of investment management at Truepoint Wealth Counsel. However, right now the fixed rate is 0.9% APY, which is relatively high for I bonds. Unlike CDs — which lock in a term for a set period of time — an I bond’s variable rate changes every six months depending on inflation. So, with inflation expected to continue to drop, November’s variable I bond rate might be even lower.

Choosing between the two depends on your financial objectives, risk tolerance and time horizon, said Michael Hammelburger, the CEO and financial advisor working for The Bottom Line Group. Here’s what to consider: 

Your estimated return

Right now, some shorter-term CDs have higher APYs rates compared to I bonds. For example, the average five-year CD rate is 4.03% — and once you lock it in, you’ll know how much you’ll earn over the next five years. But the 4.30% I bond rate only lasts for the first six months of the bond, making an I bond’s overall return less predictable than a CD’s. 

“The realized yield for investors buying I bonds today will highly depend on inflation over time. With CDs, the rate is typically fixed and known in advance,” said Keller. 

If inflation rises significantly while you’re earning interest on an I bond, you could earn a better return than with a CD. But if it decreases, your return might be smaller. Whereas, if you lock in a five-year CD now, you’ll earn a return of 4.03% throughout the end of the CD term, regardless of what happens next in the economy.

The risk of inflation going down

You shouldn’t assume that banks will adjust their CD and savings rates just because the Fed hiked them — even though most will. 

Instead, if you’re opening a CD, you’ll have two choices, said Keller. Since shorter-term CD rates are higher than longer terms right now, you must decide between shorter terms with higher rates or lock in longer terms with slightly lower rates. 

On the other hand, if you want protection against inflation, I bonds may be a better option, Hammelburger suggested. “The interest rate is a combination of a fixed rate and an inflation rate; therefore, if inflation is high, the return on an I bond may be greater than the return on a CD.” 

But with inflation coming down, your I bond rate may not be as good as two years ago. You’ll still be locking in 4.30% APY for six months if you get an I bond now, but your variable rate may not be as lucrative in the coming months. 

“I would advise that people choose to go with CDs because of longer terms such as three to five years, which now yield approximately 5% annually and in some cases even a little bit more,” said Hammelburger. “At this rate, they are accomplishing the difficult task of remaining ahead of inflation.” Your purchasing power will be protected even further by these CDs if general inflation rates continue to decline, he added. 

Tax considerations

But there are a few I bond benefits worth noting when comparing your options, said Hammelburger. That includes tax considerations.

CDs are subject to state and federal taxes since the interest earned is considered income. But the interest earned from I bonds is only taxed at the federal level — they’re not subject to state or local taxes. Additionally, you may receive a federal tax exemption if you use your I bond funds to pay for higher education. There are a few other tax exemptions available with I bonds, too.

Other factors to consider

Aside from interest rates, inflation, tax breaks and your financial goals, there are other factors Keller suggests weighing when choosing between the CDs and I bonds. 

  • Term. The minimum holding period for I bonds is one year, but if you access your funds before five years, you lose the previous three months of interest. After five years, there are no more penalties — the same as a five-year CD.
  • Purchase options. You must purchase an I bond through Treasurydirect.com, so it’s another account you’ll have to manage alongside other bank accounts you may have. 
  • Investment limits. The maximum you can purchase with an I bond is $10,000 per calendar year, though you can purchase an additional $5,000 with your tax return. So, if you want to invest more, a CD may make more sense. 

Instead of choosing between the two, you can spread your money across several savings and investing accounts. For instance, if you know you won’t need the money for at least five years, and the I bond rate is higher than a five-year CD, you may get an I bond, then build a CD ladder with other funds to have money coming due periodically. 

Or you may choose a more flexible option altogether. For example, high-yield savings accounts now have an average of 4.43% APY, although some banks offer more. Since savings accounts have a variable interest rate, you’ll risk estimating your overall return in the next few years. However, you can make regular withdrawals and contributions. Plus, when rates go up, chances are, your savings rate will, too. 


The US Treasury Department backs I bonds to protect your money against risk, hack, or inflation. Aside from safety and security, you won’t be insured up to $250,000 per person, per account by the FDIC. Instead, you’ll only be able to get $15,000 in I bonds per person, per year. 

How long does it take I bonds to mature?

I bonds mature after 30 years, but others, like Series EE bonds, only take 20 years. You won’t be able to touch the money for the first year, but if cash is in your bond before five years, you’ll forgo three months of interest. 

What is the withdrawal penalty for CDs?

The withdrawal penalty for CDs depends on the CD term and bank, but it usually is a few months of interest. 


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