Treasury raises I bond rate to 5.51% through April 2027, offering highest fixed rate in 20 years
The U.S. Treasury has raised the interest rate on Series I savings bonds to 5.51% for bonds issued from Nov. 1, 2026, through April 30, 2027, giving savers a higher return as inflation pressures persist.
The new rate is up from 4.26% for bonds issued during the previous six-month period. It combines a 1.40% fixed rate, the highest in nearly 20 years, with an inflation-linked component that adjusts twice a year.
For savers weighing where to put cash, the increase makes I bonds more attractive as a government-backed way to protect purchasing power. However, the bonds come with restrictions on when investors can withdraw their money and how much they can purchase each year.
The new rate also highlights the importance of the fixed portion of an I bond’s return. While the inflation component can rise or fall, the fixed rate remains in place for the life of the bond, which can last as long as 30 years.
The rate announcement comes as consumers continue to contend with elevated prices and higher energy costs. Whether I bonds make sense for an individual saver depends not only on the headline yield but also on liquidity needs, competing savings rates and the possibility that inflation will change.
How the new 5.51% I bond rate is calculated
The new composite rate consists of two components:
Fixed rate: 1.40%. This portion remains unchanged for the life of the bond.
Inflation rate: 4.08% annualized. This portion reflects a 2.04% increase in the Consumer Price Index for All Urban Consumers (CPI-U) over the six months from April through September 2026.
The Treasury combines the two components using a formula that accounts for their interaction, producing a composite annual rate of 5.51%. The inflation component will be recalculated in May 2027, so the current composite rate is not guaranteed for the entire life of the bond.
The Treasury’s official I bond rate information explains how the components are calculated and when they reset.
The fixed rate is the highest since 2006
The 1.40% fixed rate is the highest Treasury has offered on newly issued I bonds since November 2006. It also exceeds the 0.90% fixed rate attached to bonds issued from May through October 2026.
That distinction matters for long-term savers. Even if inflation eventually falls, the fixed portion of the return remains in place for the bond’s entire 30-year earning period.
For comparison, I bonds issued during the inflation surge of 2022 carried a fixed rate of zero, despite temporarily offering a much higher composite rate.
I bonds offer protection against inflation
I bonds are designed to help savers preserve purchasing power as consumer prices rise. Their inflation-linked component adjusts twice a year based on changes in the CPI-U, including food and energy.
Unlike a conventional fixed-rate savings bond, an I bond’s overall rate can increase when inflation accelerates and decrease when inflation cools. The redemption value cannot fall below the amount originally invested, even during deflation.
The Treasury explains that I bonds earn interest monthly, with interest compounded semiannually. Investors receive the accumulated value when they redeem the bonds or when they mature.
Inflation remains a political and financial burden
The rate announcement also offers a reminder of how dramatically inflation reshaped the savings landscape during the Biden administration. Consumer prices surged 9.1% over the 12 months ending in June 2022, the largest annual increase in more than 40 years, prompting the Treasury to offer a record 9.62% I bond composite rate that May.
The new 5.51% rate is lower than that peak but reflects the continued importance of inflation protection for households under President Donald Trump, as the cumulative price increases continue to weigh on purchasing power.
Although inflation has cooled from its 2022 peak, prices have not returned to their pre-surge levels. The new I bond rate offers a way to earn a return linked to inflation, but it cannot undo the cumulative cost increases households experienced.
How the new rate compares with previous I bond yields
The historical composite annual rates for I bonds based on issue periods is as follows
May–October 2022: 9.62%
November 2022–April 2023: 6.89%
November 2023–April 2024: 5.27%
May–October 2026: 4.26%
November 2026–April 2027: 5.51%
The new rate is substantially below the record 9.62% offered in 2022, when inflation reached a 40-year high. However, it represents a notable increase from the rate available during the preceding six months.
The Treasury’s historical I bond rate chart provides a record of fixed, inflation and composite rates across previous issue periods.
How I bonds compare with savings accounts and CDs
The new 5.51% rate may compare favorably with some certificates of deposit (CDs), high-yield savings accounts and Treasury bills. However, rates on those products vary, and the comparison depends on the account’s current yield and withdrawal terms.
I bonds have an important advantage: the 1.40% fixed component remains attached to the bond even after the inflation rate resets. But a savings account may offer easier access to money, while a CD may provide a fixed return for a defined period.
Savers should compare actual yields and restrictions rather than assuming the I bond’s headline rate will always be the highest available.
I bonds have several restrictions that distinguish them from ordinary bank savings accounts:
Annual purchase limit: Individuals can buy up to $10,000 in electronic I bonds per calendar year through TreasuryDirect.
Minimum purchase: Electronic I bonds can be purchased for as little as $25.
Minimum holding period: Investors cannot redeem I bonds during the first 12 months.
Early redemption penalty: Cashing in a bond before it is five years old forfeits the final three months of interest.
Maximum earning period: I bonds earn interest for up to 30 years.
These rules make I bonds less suitable for money that may be needed unexpectedly in the near future.
The Treasury’s I bond overview provides the official purchase and redemption requirements.
I bond tax advantages can improve the return
Interest earned on I bonds is subject to federal income tax but exempt from state and local income taxes. Investors can generally defer federal income tax on the interest until they redeem the bond or it reaches final maturity.
Under certain conditions, interest may also qualify for a federal income tax exclusion when used for eligible higher-education expenses. Eligibility depends on factors including income, ownership and qualifying educational expenses.
How to buy I bonds at the new rate
Investors can purchase electronic I bonds through TreasuryDirect. The new 5.51% composite rate applies to bonds issued from Nov. 1, 2026, through April 30, 2027.
The issue date determines which fixed rate a buyer receives. Purchasing during this six-month window locks in the 1.40% fixed component for the life of the bond, while the inflation component will continue to change every six months.
Before purchasing, savers should consider how long they can leave the money invested, whether they have sufficient emergency savings elsewhere and how the bond’s return compares with other available options.
What savers should watch through April 2027
The next major rate announcement is expected on May 1, 2027, when the Treasury will update the fixed and inflation components for the following six-month issue period.
Until then, the 5.51% composite rate provides a current benchmark for newly issued I bonds, but not a promise of the same return beyond the first six months.
For savers seeking a government-backed investment with inflation protection and a relatively high fixed component, the new rate offers a reason to revisit I bonds. The trade-off remains limited liquidity and a purchase cap, making them one part of a broader savings strategy rather than a substitute for accessible emergency cash.
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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