I bond

What It Means

An I bond is a US Treasury savings bondSavings bondA US Treasury savings bond, sold today as EE or I bonds through TreasuryDirect, that earns interest for up to 30 years and can be cashed after one. See more built to keep pace with inflationInflationA general rise in the prices of goods and services over time, so the same amount of money buys less than it did before. See more. Its rate has two parts: a fixed rateFixed interest rateAn interest rate that's set when you borrow and stays the same for the life of the loan, so the monthly payment doesn't change. See more set when you buy, and an inflation rate based on the Consumer Price Index that Treasury resets every six months. For I bonds issued May 2026 through October 2026, TreasuryDirect set a composite rate of 4.26% for the first six months, made of a 0.90% fixed rate and 3.34% annualized inflation. You buy them electronically through TreasuryDirect, from $25 up to $1010,000 stepsA popular daily step goal that began as the name of a 1960s Japanese pedometer; later studies find health benefits begin well below it. See more,000 a calendar year.

How People Say It

• "I bonds are paying 4.26% right now."
• "You can't touch it for a year."
• "Cash it after five years and there's no penalty."

The Breakdown

An example. In June 2026, Ana puts $1,000 of her emergency savingsEmergency fundMoney set aside only for unplanned costs, like a car repair, a medical bill or a lost paycheck, kept where you can reach it quickly. See more into I bonds through TreasuryDirect, drawn by the 4.26% rate and the inflation link.

Where it goes wrong. Four months later her car needs a $900 repair, and the bond can't be touched: TreasuryDirect doesn't let you cash an I bond in its first year. She puts the repair on a credit card. At month 24 she needs money again. This time she can cash it, but because she's held it under five years, she gives up the last three months of interestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more. At a 4.26% rate, that's roughly $10.65 on $1,000.

What to watch for

• The one-year lock. Keep a separate cash cushion you can reach any day.
• The rate changes. The 4.26% applies to the first six months after the issue date; after that, the rate follows later announcements every May 1 and November 1.
• The yearly limit. $10,000 of electronic I bonds per person each calendar year.

Good to Know

TreasuryDirect says I bond interest accrues monthly and compounds semiannually, and a bond earns interest until you cash it or it reaches 30 years. Rates are announced each May 1 and November 1, so check TreasuryDirect's I bond rates page for the latest before you buy. As of January 1, 2025, paper I bonds can no longer be bought, which ended the option to buy them with a tax refund. Unlike a bank deposit, you can't withdraw from an I bond in its first 12 months, so it works best for money you won't need within a year.

Related Terms and Categories

• Savings bond

  A US Treasury savings bond, sold today as EE or I bonds through TreasuryDirect, that earns interest for up to 30 years and can be cashed after one.

• Inflation

  A general rise in the prices of goods and services over time, so the same amount of money buys less than it did before.

• Certificate of deposit

  A deposit you agree to leave at a bank or credit union for a set term, until its maturity date, usually with a penalty for taking money out early.

• High-yield savings account

  A savings account paying a variable interest rate that's generally higher than a traditional savings account's, often offered by online banks.

• Emergency fund

  Money set aside only for unplanned costs, like a car repair, a medical bill or a lost paycheck, kept where you can reach it quickly.

• Purchasing power

  How much a unit of money, such as one dollar, can buy. When prices rise faster than your money grows, its purchasing power falls.

Saving and investing basics