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.

Right now, some shorter-term CDs have higher APYs rates compared to I bonds. Here's what to consider: Your estimated return So, with inflation expected to continue to drop, November's variable I bond rate might be even lower.Ĭhoosing 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. 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. However, right now the fixed rate is 0.9% APY, which is relatively high for I bonds. 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.

But I bonds work a little differently than CDs.įirst, 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. '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.īonds and CDs have a lot in common - competitive, guaranteed rates and withdrawal penalties if you take money out before a certain point. So does it make sense to invest in an I bond right now?

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. The Treasury Department recently announced its latest I bond rate for the next six months - 4.30% APY.

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