The I bond composite rate climbed to 5.51 percent for purchases made between November 2026 and April 2027, up from 4.26 percent in the prior six-month period. The fixed rate portion rose to 1.40 percent, the highest since November 2006, according to financial writer David Enna at Tipswatch.
I bonds combine a fixed rate that never changes with an inflation rate that adjusts every six months. The fixed rate matters more because the inflation component moves with prices while the fixed piece locks in on the purchase date and remains constant for the life of the bond.
The 5.51 percent composite rate compares favorably to some high-yield savings accounts paying 4 to 5 percent currently. However, I bonds carry restrictions that savings accounts do not. You cannot withdraw funds for a full year after purchase. If you cash out between one and five years, you forfeit the last three months of interest. Savings accounts allow withdrawals anytime with no penalty.
The inflation portion of an I bond drops when inflation cools, whereas high-yield savings account rates tend to track Federal Reserve moves more directly. Neither is automatically better. Your choice depends on when you might need the cash.
I bonds make sense for money you will not need for at least a year, ideally longer. They work well for savings goals two to five years away, such as a wedding or home down payment. Do not buy I bonds if you are still building an emergency fund that you need to access immediately.
Each person can buy up to $10,000 in electronic I bonds per calendar year through TreasuryDirect. Interest is taxable on your federal return but not subject to state and local income tax. Some filers can use I bond interest tax-free for qualified education expenses, though income limits apply.
The next rate reset occurs May 1, 2027. Anyone who buys now locks in 1.40 percent fixed for the life of the bond, regardless of what the rates become at that reset.