“I” Bond Interest Question
 

The I Bond interest changes every 6 months. If cashed in prior to 5 years there is a 3 month interest penalty deducted. My question is at what interest rate is the penalty calculated since the interest rate may have changed numerous times, or is it an average of all the rates?

Check this out.

https://districtcapitalmanagement.co...drawal_penalty

As far as I can tell (I am not a financial expert), you will forfeit the most recent three months of interest. So whatever the current rate is, that would be the amount that you would lose.

The rate is set twice a year for a 6 month time span each

I have learned a lot about I-bonds from this YouTuber:
Diamond NestEgg - YouTube

It takes some time to get used to her appearance and delivery. I started watching her about 6 months ago. She gets into the penalties involved with early disposal of the I-bond.

We bought our first I-bonds in Dec. 2022. I continue to listen to her I-bond advice as things change.

The last 3 months interest is the penalty. The rate went down this month a lot. If you wait 3 months from now and redeem, you will be giving up 3 months at the lower rate.