I Bond vs. CD for short-term savings?

Submitted by Technical_Artichoke5 t3_z8s2hg in personalfinance

I Bond is a 6.89% and an 18-month CD with my bank is at 4.5% APY. I have about to $25k to park in short-term savings and I want to keep it semi-liquid. Not knowing what the next I Bond rate will be, my instinct says to get the CD. Thoughts?

EDIT: I already have fully-funded emergency savings in an HYSA. Maybe it doesn't have to be liquid?

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Sheng25 t1_iyd2kak wrote

Also keep in mind that I Bonds have a 3 month penalty if redeemed within 5 years.

but even so, I would go with the I Bonds. There is currently a 0.4% fixed rate. That means the inflation-based rate only needs to be 4.1 to stay even with the CD. I might be a pessimist but I don't see inflation coming down that fast. Also, with I Bonds you get interest on the entire month you invested it so you can theoretically buy a 4 week treasury now and then buy the IBonds and still get the full interest for December.

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sokpuppet1 t1_iyczw1l wrote

You can only put $10,000 in ibonds, so I';d split the baby and put $10,000 in an I-bond and the rest a cd.

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FckMitch t1_iyd2eoi wrote

Do u live in a state w income tax? Then TBills over CDs unless cd rate after state tax is better than TBills rate.

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SamsoniteAG1 t1_iyd2xw0 wrote

I bond Is for 5 years or you will be deducted 3 months worth of interest if deducted prior to this also for the ibond there is a 10k max cap per year for married couples ot doubles. Also i bond rate will change after 6 months no tellling if it'll go higher or lower. Hope this helps

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