Should you cash old I bonds and buy new ones?
What switching costs, how fast a 1.40% fixed rate earns it back, and when waiting for the 5-year mark is better.
- Bought May 2020 through November 2021 with a 0% fixed rate: past the 5-year mark, so there is no penalty. A new bond earns about 1.43 points a year more from the first month.
- Bought December 2021 through October 2022 (the 2021-2022 rush): still under 5 years, so cashing costs the last 3 months of interest, 0.78% to 0.85% of the bond's value. The higher fixed rate earns that back in 5 to 7 months.
- If your bond turns 5 between now and April 2027, waiting for that month and switching then avoids the penalty and still gets the 1.40% fixed rate.
- If it turns 5 after April 2027, waiting only pays if Treasury's fixed rate at that point is about 1.39% to 1.60% or more. 1.40% is the rate on sale now; nobody knows the next one.
An I bond's fixed rate never changes. A new bond bought through April 2027 keeps a 1.40% fixed rate for life and earns 5.51% at today's 2.04% inflation rate. Every older bond with a lower fixed rate gets the same inflation part, so the difference between them is the fixed-rate gap, every year, for as long as both are held. The cost of switching is the penalty: a bond cashed before it is 5 years old loses its last 3 months of interest (TreasuryDirect), and Treasury's published values already exclude it.
Bonds under 5 years old: penalty and payback
Per $10,000 of I bonds bought in each month, valued for November 2026 from Treasury's value file. "Earned back in" is how long the new bond takes to catch up with the old one after paying the penalty. Bonds less than 12 months old can't be cashed and are not listed.
| Bought | Fixed rate | Value in November 2026 | Penalty if cashed now | Penalty ends | Earned back in | Better choice |
|---|---|---|---|---|---|---|
| 0.00% | $12,332 | $104 | 7 months | Wait until December 2026 (no penalty), then switch by April 2027: about $104 more | ||
| 0.00% | $12,296 | $104 | 7 months | Wait until January 2027 (no penalty), then switch by April 2027: about $76 more | ||
| 0.00% | $12,264 | $100 | 6 months | Wait until February 2027 (no penalty), then switch by April 2027: about $48 more | ||
| 0.00% | $12,232 | $100 | 6 months | About even: switch now or at March 2027 | ||
| 0.00% | $12,200 | $96 | 5 months | About even: switch now or at April 2027 | ||
| 0.00% | $11,940 | $96 | 7 months | Switch now, unless the fixed rate on sale in May 2027 is 1.39% or more | ||
| 0.00% | $11,904 | $100 | 7 months | Switch now, unless the fixed rate on sale in June 2027 is 1.43% or more | ||
| 0.00% | $11,872 | $100 | 7 months | Switch now, unless the fixed rate on sale in July 2027 is 1.46% or more | ||
| 0.00% | $11,840 | $100 | 6 months | Switch now, unless the fixed rate on sale in August 2027 is 1.52% or more | ||
| 0.00% | $11,812 | $92 | 5 months | Switch now, unless the fixed rate on sale in September 2027 is 1.57% or more | ||
| 0.00% | $11,780 | $92 | 5 months | Switch now, unless the fixed rate on sale in October 2027 is 1.60% or more | ||
| 0.40% | $11,560 | $108 | 12 months | Switch now, unless the fixed rate on sale in November 2027 is 1.44% or more | ||
| 0.40% | $11,524 | $108 | 11 months | Switch now, unless the fixed rate on sale in December 2027 is 1.46% or more | ||
| 0.40% | $11,488 | $108 | 10 months | Switch now, unless the fixed rate on sale in January 2028 is 1.51% or more | ||
| 0.40% | $11,452 | $108 | 9 months | Switch now, unless the fixed rate on sale in February 2028 is 1.52% or more | ||
| 0.40% | $11,416 | $108 | 9 months | Switch now, unless the fixed rate on sale in March 2028 is 1.60% or more | ||
| 0.40% | $11,384 | $104 | 8 months | Switch now, unless the fixed rate on sale in April 2028 is 1.65% or more | ||
| 0.90% | $11,364 | $120 | about 2.1 years | Marginal: pays only if you keep the new bond over about 2.1 years; no penalty from May 2028 | ||
| 0.90% | $11,324 | $120 | about 2 years | Marginal: pays only if you keep the new bond over about 2 years; no penalty from June 2028 | ||
| 0.90% | $11,284 | $120 | 23 months | Marginal: pays only if you keep the new bond over 23 months; no penalty from July 2028 | ||
| 0.90% | $11,244 | $120 | 21 months | Marginal: pays only if you keep the new bond over 21 months; no penalty from August 2028 | ||
| 0.90% | $11,204 | $120 | 20 months | Marginal: pays only if you keep the new bond over 20 months; no penalty from September 2028 | ||
| 0.90% | $11,168 | $116 | 18 months | Marginal: pays only if you keep the new bond over 18 months; no penalty from October 2028 | ||
| 1.30% | $11,244 | $132 | over 10 years | Keep it: the penalty takes over 10 years to earn back | ||
| 1.30% | $11,200 | $132 | over 10 years | Keep it: the penalty takes over 10 years to earn back | ||
| 1.30% | $11,160 | $128 | over 10 years | Keep it: the penalty takes over 10 years to earn back | ||
| 1.30% | $11,116 | $128 | about 9.8 years | Keep it: the penalty takes about 9.8 years to earn back | ||
| 1.30% | $11,076 | $124 | about 9.1 years | Keep it: the penalty takes about 9.1 years to earn back | ||
| 1.30% | $11,036 | $124 | about 8 years | Keep it: the penalty takes about 8 years to earn back | ||
| 1.30% | $10,956 | $128 | over 10 years | Keep it: the penalty takes over 10 years to earn back | ||
| 1.30% | $10,916 | $124 | over 10 years | Keep it: the penalty takes over 10 years to earn back | ||
| 1.30% | $10,872 | $128 | over 10 years | Keep it: the penalty takes over 10 years to earn back | ||
| 1.30% | $10,832 | $124 | about 9.8 years | Keep it: the penalty takes about 9.8 years to earn back | ||
| 1.30% | $10,792 | $124 | about 8.8 years | Keep it: the penalty takes about 8.8 years to earn back | ||
| 1.30% | $10,752 | $120 | about 8 years | Keep it: the penalty takes about 8 years to earn back | ||
| 1.20% | $10,708 | $120 | about 5.7 years | Keep it: the penalty takes about 5.7 years to earn back | ||
| 1.20% | $10,668 | $120 | about 5.2 years | Keep it: the penalty takes about 5.2 years to earn back | ||
| 1.20% | $10,628 | $120 | about 4.9 years | Keep it: the penalty takes about 4.9 years to earn back | ||
| 1.20% | $10,588 | $120 | about 4.8 years | Keep it: the penalty takes about 4.8 years to earn back | ||
| 1.20% | $10,552 | $116 | about 4.3 years | Keep it: the penalty takes about 4.3 years to earn back | ||
| 1.20% | $10,512 | $116 | about 4 years | Keep it: the penalty takes about 4 years to earn back | ||
| 1.10% | $10,532 | $116 | about 3.7 years | Keep it: the penalty takes about 3.7 years to earn back | ||
| 1.10% | $10,492 | $116 | about 3.5 years | Keep it: the penalty takes about 3.5 years to earn back | ||
| 1.10% | $10,456 | $116 | about 3.2 years | Keep it: the penalty takes about 3.2 years to earn back | ||
| 1.10% | $10,416 | $116 | about 3 years | Marginal: pays only if you keep the new bond over about 3 years; no penalty from August 2030 | ||
| 1.10% | $10,380 | $112 | about 2.8 years | Marginal: pays only if you keep the new bond over about 2.8 years; no penalty from September 2030 | ||
| 1.10% | $10,344 | $112 | about 2.4 years | Marginal: pays only if you keep the new bond over about 2.4 years; no penalty from October 2030 | ||
| 0.90% | $10,308 | $108 | about 2.1 years | Marginal: pays only if you keep the new bond over about 2.1 years; no penalty from November 2030 |
Bonds 5 years old or more: no penalty
These can be cashed for their full value. What a new bond adds is the fixed-rate gap; the last column is about what that is worth in the first year on the bond's current value.
| Bought | Fixed rate | Value of $10,000 in November 2026 | New bond earns more by | Extra in year one |
|---|---|---|---|---|
| to | 1.10% | $23,224 to $24,244 | about 0.31 points | about $71 to $74 |
| to | 1.00% | $22,136 to $22,944 | about 0.41 points | about $90 to $94 |
| to | 1.20% | $22,628 to $23,060 | about 0.20 points | about $46 to $47 |
| to | 1.00% | $21,248 to $21,632 | about 0.41 points | about $87 to $88 |
| to | 1.30% | $21,040 to $21,448 | about 0.10 points | about $21 to $22 |
| to | 1.20% | $20,300 to $20,684 | about 0.20 points | about $41 to $42 |
| to | 0.00% | $16,208 to $16,432 | about 1.43 points | about $232 to $235 |
| to | 0.70% | $17,764 to $18,064 | about 0.71 points | about $127 to $129 |
| to | 0.10% | $15,704 to $15,928 | about 1.33 points | about $208 to $211 |
| to | 0.30% | $16,184 to $16,432 | about 1.12 points | about $182 to $184 |
| to | 0.20% | $15,688 to $15,920 | about 1.22 points | about $192 to $195 |
| to | 0.00% | $14,204 to $15,300 | about 1.43 points | about $203 to $219 |
| to | 0.20% | $14,452 to $14,664 | about 1.22 points | about $177 to $180 |
| to | 0.10% | $14,188 to $14,392 | about 1.33 points | about $188 to $191 |
| to | 0.00% | $13,800 to $14,092 | about 1.43 points | about $197 to $201 |
| to | 0.10% | $13,828 to $14,132 | about 1.33 points | about $183 to $187 |
| to | 0.00% | $13,496 to $13,872 | about 1.43 points | about $193 to $198 |
| to | 0.10% | $13,468 to $13,660 | about 1.33 points | about $179 to $181 |
| to | 0.30% | $13,524 to $13,732 | about 1.12 points | about $152 to $154 |
| to | 0.50% | $13,364 to $13,768 | about 0.92 points | about $123 to $126 |
| to | 0.20% | $12,984 to $13,176 | about 1.22 points | about $159 to $161 |
| to | 0.00% | $12,468 to $12,864 | about 1.43 points | about $178 to $184 |
Before you switch
Each Social Security Number can buy $10,000 of electronic I bonds per calendar year (TreasuryDirect: purchase limits). A $10,000 bond from 2020 to 2022 is worth more than that now, so one year's limit will not take all of it. Because the 1.40% window runs into 2027, someone who has not bought I bonds in 2026 can buy $10,000 by December 31 and more from January through April 2027, all at 1.40%.
Taxes come due sooner. Interest on a bond you cash is reported for the year you cash it (IRS Publication 550). Switching does not add tax, but it ends the deferral on the old bond's interest, which for a 2020-2022 bond is mostly what it earned in the 2021-2023 inflation spike. Cashing in January instead of December moves that bill to the next tax year. It is not subject to state income tax either way.
The clock restarts. The new bond can't be cashed for 12 months, and cashing it before 5 years costs 3 months of interest again (TreasuryDirect). Switching only makes sense for money that will stay in I bonds.
The projections are estimates. They hold the inflation part at 2.04% per six months for both bonds. A different inflation rate moves both bonds together, so the payback months barely change. The deflation floor (a composite rate can't go below zero) is ignored.
How to cash: cashing savings bonds · the 12-month and 5-year rules · TreasuryDirect: cashing a bond. What any bond is worth: savings bond calculator.
Frequently asked questions
Should I cash my 2022 I bonds and buy new ones?
If they have a 0% fixed rate (bought May 2020 through October 2022), a new bond bought through April 2027 earns about 1.43 points a year more for life. Bonds under 5 years old cost 3 months of interest to cash, and the higher rate earns that back in a few months; the table shows each purchase month. Taxes on the old bond's interest come due for the year you cash it.
How long does it take to earn back the I bond early-cash penalty?
For a 0% fixed-rate bond switched into a 1.40% bond, 5 to 7 months. For bonds with fixed rates closer to 1.40%, much longer: the gap is smaller, so the same 3-month penalty takes years.
Is it better to wait until my I bond is 5 years old?
If it turns 5 by April 2027, usually yes: you skip the penalty and can still buy at 1.40%. If it turns 5 later, waiting only wins if the fixed rate on sale then is at least as high, which nobody knows in advance.
How much can I move into new I bonds?
$10,000 of electronic I bonds per Social Security Number per calendar year, so a large holding may take more than one year to move.
More: what every existing I bond earns next · buy now or wait · fixed rate history.
Values are Treasury's (Fiscal Data savings bond value files, per $25 scaled to $10,000, November 2026). Penalties and projections use Treasury's accrual method (semiannual compounding from the issue month, values rounded to the cent per $25, last 3 months of interest forfeited under 5 years), checked to the cent against the value file for every bond listed on each build. Rules from TreasuryDirect and IRS Publication 550, linked where used. This site is independent of the Treasury and is not investment or tax advice.