How Series I Savings Bonds Work
A Series I Savings Bond is a US Treasury product designed to protect your money from inflation. Its composite rate combines a fixed rate that stays the same for the bond's life with an inflation-adjusted rate that resets every 6 months, so your return moves with the cost of living. Bonds can be purchased directly through TreasuryDirect, with an annual purchase limit per person.
The catch is liquidity: you can't redeem an I Bond within the first 12 months at all, and if you cash it out before 5 years, you lose the last 3 months of interest as a penalty. This calculator shows both your interest earned and what you'd actually walk away with if you redeemed today, factoring in that penalty when it applies.
Frequently Asked Questions
The composite rate combines a fixed rate (set for the bond's life) and an inflation rate that adjusts every 6 months based on CPI-U, announced each May and November.
You must hold it at least 1 year. If you cash out before 5 years, you forfeit the last 3 months of interest as a penalty.
Interest is exempt from state and local taxes but subject to federal income tax, unless used for qualified higher education expenses.