The headline I bond rate is the number everyone notices. 4.26%, no risk to your principal, backed by the U.S. government.
It's also not the number that matters most.
An I bond rate has two parts. The first is a fixed rate that stays the same for as long as you hold the bond.
The second is an inflation rate that resets every six months. Today's fixed rate is 0.90%, and that part is locked in.
The 3.34% inflation portion will move. It could rise, it could fall, and it could hit zero if inflation does.
The 4.26% headline only describes the first six months. The real return is 0.90% above whatever inflation does, for up to 30 years.
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For most of the past decade, the I bond fixed rate sat near zero. Buyers were getting inflation back, no more and no less.
0.90% above inflation, locked for 30 years, is a different deal. It's among the highest fixed rates the bond has offered since 2007, second only to a brief 1.30% reset in late 2023.
There's a catch. Your money goes in for at least 12 months, and cashing out before five years costs three months of interest.
The buying limit is $10,000 per person per year. Treasury bills skip those rules, but they also don't keep up with inflation past their term.
Inflation came back. The Consumer Price Index rose 3.3% in March from a year earlier, up from 2.4% in February.
Most of the move came from gas prices climbing because of the Iran war. That's a sharp turn from the cooling story of late 2024 and early 2025.
If prices stay around current levels, future six-month adjustments will follow them up. If they slip, the inflation portion of the rate slips too.
The Treasury announces the next I bond rate on November 1. That release will reset the inflation portion based on what CPI does between March and September.
The fixed rate is the real signal. If it stays near 0.90% or moves higher, the bond keeps doing what it's built to do - beat inflation while the rest of the market argues about what comes next.
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