Series I Bonds Yield Peaks at 5.51% as Inflation-Linked Rate Rises

Newly issued Series I bonds now pay a 5.51% annual composite rate, the highest yield since November 2022. The rate combines a fixed 1.40% component, the strongest since 2006, with a variable 4.08% part that tracks the consumer price index and resets every six months. Ken Tumin, founder of DepositQuest.com, called the new rate "very attractive" and said the bonds look "very competitive" against savings accounts and short‑term CDs for the next half‑year. The fixed portion stays the same for the life of the bond, appealing to longer‑term investors. Individuals can buy up to $10,000 of electronic I bonds per calendar year through a TreasuryDirect account and may open additional accounts for family members or businesses. Interest accrues tax‑deferred, is exempt from state and local taxes, and can be free of federal tax when used for qualified education expenses. Bonds are locked for 12 months; redeeming within five years forfeits the last three months of interest. Advisors suggest keeping three to six months of living expenses in liquid cash, using I bonds as a secondary emergency fund, a view shared by David Enna of Tipswatch.com. After five years, bonds can be redeemed without penalty. Some experts, like certified financial planner Eileen Olson of Emerald Wealth, find the $10,000 limit too small for larger portfolios, noting it yields about $550 before taxes on a $2 million portfolio. Olson prefers Treasury Inflation‑Protected Securities, which have no purchase caps and yield 2.3%‑above 3% for 30‑year terms as of Nov 2. For short‑term cash, Treasury bills, high‑yield savings accounts, one‑year CDs and money‑market funds all posted yields above 4% on the same date. ## Context I bonds are government‑backed, inflation‑indexed securities that blend a fixed rate with a CPI‑linked variable rate, offering low‑risk protection of purchasing power but limited by annual purchase caps and early‑withdrawal penalties.