Why Clark Says It’s Time To Dump I Bonds – Technologist

Series I savings bonds have been a boon for opportunistic investors during inflationary periods, but, as with anything, there may come a time when it’s best to dump them.

Money expert Clark Howard says now’s the time – if you bought I bonds during a certain timeframe over the past two years.

“The Series I savings bond, which was such a great thing, has become a dud,” Clark says.

Time To Get Rid of Old Savings Bonds? Clark Says Yes

To learn why it’s to your advantage to get rid of your old savings bonds, we’ll have to delve into some recent history: 2022.

“Series I savings bonds were hot, hot, hot during the inflationary cycle we had from the supply chain disruptions during the COVID cycle,” Clark says. “The rate people were earning back on Series I bonds during the peak of the inflation cycle was just under 10%.”

Savings Bond Rates Then

Indeed, the U.S. Treasury, back in May 2022, was promoting a return of 9.62% on Series I savings bonds. It was the money move to make.

“People were clamoring to keep up with inflation that for many people – except for those alive back in the ‘70s – was unprecedented in their lifetime. So these Series I savings bonds were the safe place to go,” Clark says.

But things have changed.

Savings Bond Rates Now

According to the Treasury’s website, as of December 2024, the current I-bond savings rate is 3.11%. Not bad on the surface, but this includes a fixed rate of 1.20%. The problem with the older I-bonds that were sold at the height of inflation is that they don’t include the fixed rate and rely on the inflation rate alone.

“And the [inflation] rate on Series I savings bonds resets every six months so the rate has just gone down, down, down as inflation has trended steadily down,” Clark says.

“With those older I bonds, you got no bonus. You only got the inflation rate, because the demand was nearly unlimited,” Clark says. “So there was no reason for the Treasury to give you bonus money. So if you’ve got those old Series I bonds, you need to dump them.”

But before you dump them, three things:

• You’ll forfeit the last 90 days of interest, which is part of the rules when dumping Series I bonds.
• “If you love owning I bonds, you can actually exchange your old ones or new ones,” Clark says. Visit savingsbonds.gov, to redeem your savings bond.
• You should also check to see if you have savings bonds you’ve forgotten about at Treasury Hunt on the Treasury’s website. You’ll need your name and state or Social Security Number (or Taxpayer Identification Number) to get started.

“You’re going to forfeit 90 days of interest. But that interest now is pitiful,” Clark says. “So you dump out of those, forfeiting the last 90 days of interest, and then you’re a free agent.”

So, let’s say you’re over savings bonds for now and looking for new places to stash your savings. You may be wondering the following question:

Where Should I Put My Money Now?

“So think about it, just two years ago, people were earning almost 10% and now that is 1.9%, where you can put money in a simple savings account with online banks that are paying the best rates,” Clark says.

Clark references 5% as a savings goal in the podcast, but due to the Fed’s recent rate cuts, interest rates have dropped. However, you can still get rates up to 4.25% at some of the best online banks.

Final Thoughts

With one of the Series I bond’s two rates sinking further every six months, it has not become financially disadvantageous to hold onto older savings bonds, Clark says.

“It is worth the forfeit of 90 days of interest to exit either into new ones or follow the money and the money right now says you’re better off in these online banks,” he says.

Want more options? Check out our guide on the best high-yield savings account.

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