How to get the 'best of both worlds' for Series I bond interest rates before November

After a difficult year for the stock market, investors have poured money into Series I bonds, a nearly risk-free and inflation-protected asset that's paying a record 9.62% annual interest rate through October.

With the rate expected to drop to roughly 6.48% in November, there's a brief window to secure higher interest for six months, assuming you haven't exceeded the I bond purchase limits for 2022. 

While I bond rates shift twice yearly based on inflation, you can still lock in 9.62% annual interest for six months — as long as you complete the purchase by Oct. 28. And six months after your purchase date, you'll earn roughly 6.48% for another six months.

"That's an option if someone wants the best of both worlds," said Ken Tumin, founder and editor of DepositAccounts.com, who tracks I bonds, among other assets. 

There are two parts to I bond rates: a fixed rate, which stays the same after purchase, and a variable rate, which shifts twice per year based on inflation.

The U.S. Department of the Treasury announces new rates every May and November, and you can estimate the next variable rate about two weeks before from the consumer price index reports released in April and October.

The estimates offer a brief period to know roughly what you'll earn for one year, which is how long you'll lose access to the funds after buying.

"It's nice to know what interest rates you will get when you're committing to a 12-month lockup," said Jeremy Keil, a certified financial planner with Keil Financial Partners in Milwaukee.

While it's too early to estimate rates for May 2023, buying I bonds before the end of October means you'll receive the May and November rates for six months each.

"There's no doubt that it's better to get the 9.62% for the first six months, and then 6.48% for six months," said David Enna, founder of Tipswatch.com, a website that tracks I bond rates. 

"A short-term investor — somebody just wanting to put away cash — should definitely buy in October," he said.

However, if you're trying to secure the 9.62% rate before November, Enna suggests making the purchase no later than a few business days before the end of October.

You must complete your purchase and receive a confirmation email by Oct. 28, according to TreasuryDirect.

While roughly knowing I bond rates for one year may be appealing, there are a few things to consider before buying, experts say.

"The biggest downside is you are locked in for 12 months," Keil said. "You cannot take it out for any reason." And you'll give up three months of interest by cashing in before five years. 

Still, I bonds may be worth considering for a portion of your emergency savings, as long as there's other cash readily available for unexpected costs, he said. 

And if you're expecting college tuition bills in 2024, Keil said it's a "great time" to secure guaranteed interest for one year, which is tax-free for qualified education expenses.

Correction: To secure the 9.62% rate before November, you must complete your purchase and receive a confirmation email by Oct. 28, according to TreasuryDirect. An earlier version misstated the timing.