How to Buy I Bonds: A Guide to Inflation-Protected Savings Bonds

How to Buy I Bonds

If you are looking for a way to save your money and protect it from the inflation Americans are experiencing, you may want to consider learning how to buy I bonds.

I bonds, or Ibonds, are a type of U.S. savings bond that offer tax advantages, low risk, and inflation protection.

In this article, we will show you how to buy Ibonds, how they work, and what are their benefits and drawbacks. We will also provide you with a table of historical and current interest rates for all I bonds issued.

Note: While hardcore financial independence enthusiasts idealize the fire and forget method of dollar cost averaging into passive index fund investing, your particular circumstance and risk tolerance may have you desiring to explore additional options for your money.

By the end of this article, you will have a better understanding of whether I bonds are a suitable option for your portfolio.

Key Takeaways

What are I bonds?How do they work?How to buy them?What are the benefits and drawbacks?
I bonds are a type of U.S. savings bond that protect your money from inflation.I bonds earn a fixed rate of interest plus a variable rate that changes with inflation every six months.You can buy electronic I bonds online through TreasuryDirect or paper I bonds with your tax refund.I bonds offer tax advantages, low risk, and inflation protection, but they also have low liquidity, low returns, and purchase limits.
How to Buy iBonds

What are I bonds?

I bonds are a type of U.S. savings bond that protect your money from inflation. They are issued by the U.S. Treasury and backed by the full faith and credit of the U.S. government. They are designed to help you save for long-term goals, such as retirement, education, or [financial independence].

I bonds are different from other types of savings bonds, such as EE bonds or HH bonds, in that they have two components to their interest rate: a fixed rate and a variable rate. The fixed rate is set at the time of purchase and remains the same for the life of the bond. The variable rate is based on the Consumer Price Index for Urban Consumers (CPI-U) and changes every six months, on May 1 and November 1.

The combination of the fixed and variable rates ensures that your bond’s value will keep up with inflation over time. If inflation is high, your bond will earn more interest. If inflation is low, your bond will earn less interest, but it will never lose value.

How do I bonds work?

I bonds earn interest monthly, but you don’t receive the interest until you cash in the bond. The interest is compounded semiannually, meaning that every six months, the bond’s interest rate is applied to a new principal value that includes the previous interest earned.

For example, suppose you buy an I bond for $1,000 with a fixed rate of 0.9% and an inflation rate of 3.4%. For the first six months, your bond will earn interest at a combined rate of 4.3% (0.9% + 3.4%). At the end of six months, your bond’s value will be $1,021.50 ($1,000 x 1.043). For the next six months, your bond will earn interest at a new combined rate that reflects the updated inflation rate. Suppose the inflation rate drops to 2%. Then your bond will earn interest at a combined rate of 2.9% (0.9% + 2%). At the end of one year, your bond’s value will be $1,049.72 ($1,021.50 x 1.029).

Current and historical rates of I bonds

The table shows the fixed rate, the inflation rate, and the composite rate for each six-month period from May 2009 to October 2023. The composite rate is the combined rate of interest that the bond earns, which is calculated as follows:

[Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

Issue DateFixed RateInflation RateComposite Rate
Nov 2023 – Apr 20241.33%3.94%5.27%
May 2023 – Oct 20230.90%1.69%4.30%
Nov 2022 – Apr 20230.00%3.24%6.54%
May 2022 – Oct 20220.00%4.81%9.84%
Nov 2021 – Apr 20220.00%3.56%7.19%
May 2021 – Oct 20210.00%1.77%3.54%
Nov 2020 – Apr 20210.00%0.84%1.68%
May 2020 – Oct 20200.00%0.53%1.06%
Nov 2019 – Apr 20200.20%-0.02%0.18%
May 2019 – Oct 20190.50%-0.02%0.48%
Nov 2018 – Apr 20190.50%2.83%5.83%
May 2018 – Oct 20180.30%2.22%4.74%
Nov 2017 – Apr 20180.10%1.24%2.58%
May 2017 – Oct 20170.00%1.96%3.96%
Nov 2016 – Apr 20170.00%1.38%2.76%
May 2016 – Oct 20160.00%-0.08%, but set to zero by law
Current and Historical Rates for I Bonds from Treasury Direct

You can find the current and historical interest rates for all I bonds ever issued on the TreasuryDirect website.

How to buy I bonds?

You can buy I bonds in two ways: electronically or on paper.

Electronic I bonds

You can buy electronic I bonds online through TreasuryDirect, a secure website operated by the U.S. Treasury that allows you to buy and manage various Treasury securities.

To buy electronic I bonds, you need to:

  • Have a Social Security number or an Employer Identification Number
  • Be a U.S. citizen, a U.S. resident, or a civilian employee of the U.S. government
  • Have a checking or savings account at a U.S. financial institution
  • Have an email address and access to a web browser

Once you have these requirements, you can create a TreasuryDirect account and follow these steps:

  1. Log in to your account and select “BuyDirect” from the menu
  2. Choose “Series I U.S. Savings Bond” from the list of securities
  3. Enter the amount you want to buy (minimum $25, maximum $10,000 per year)
  4. Choose whether you want to buy the bond for yourself or as a gift for someone else
  5. Review your order and confirm it
  6. Pay for your order by debiting your bank account

You can access your electronic I bonds anytime through your TreasuryDirect account. You can also view their current value, change their registration details, transfer them to another account holder, or redeem them online.

Paper I bonds

You can also buy paper I bonds with your federal income tax refund. To do this, you need to:

  • File your tax return electronically or on paper
  • Choose to receive all or part of your refund as paper I bonds
  • Fill out Form 8888, Allocation of Refund (Including Savings Bond Purchases), and attach it to your tax return
  • Indicate how much of your refund you want to use to buy paper I bonds (minimum $50, maximum $5,000 per year)
  • Choose whether you want to buy the bonds for yourself or as a gift for someone else
  • Provide the name, Social Security number, and address of the bond owner and co-owner (if any)

The IRS will mail you your paper I bonds within three weeks of processing your tax return. You can keep them in a safe place until you need to cash them. You can also convert your paper I bonds to electronic I bonds through TreasuryDirect.

What are the benefits and drawbacks of I bonds?

I bonds have several advantages and disadvantages that you should consider before buying them. Here are some of the main ones:


  • Tax advantages: You don’t have to pay state or local income taxes on your I bond earnings. You also have the option to defer federal income taxes until you redeem the bond or it matures. If you use the bond proceeds to pay for qualified higher education expenses, you may be able to exclude some or all of the interest from your taxable income.
  • Low risk: I bonds are backed by the U.S. government, so you don’t have to worry about losing your principal or interest. They also protect your purchasing power from inflation, as their interest rate adjusts every six months to reflect changes in the CPI-U.
  • Inflation protection: I bonds are one of the few investments that offer inflation protection without exposing you to market risk. Unlike other inflation-linked securities, such as Treasury Inflation-Protected Securities (TIPS), I bonds don’t fluctuate in value with changes in market interest rates. They also have a guaranteed minimum interest rate of 0%, so they will never lose value even if inflation turns negative.


  • Low liquidity: I bonds are not very liquid, meaning that they are not easy to convert into cash. You have to wait at least one year after buying an I bond before you can redeem it. If you redeem it within five years, you will lose the last three months of interest as a penalty. You also have to redeem your I bonds through TreasuryDirect or a financial institution that participates in the Savings Bond Redemption Program, which may limit your options.
  • Low returns: I bonds have relatively low returns compared to other investments, such as stocks, bonds, or mutual funds. The fixed rate component of the I bond interest rate is usually lower than the average market interest rate for similar securities. The inflation rate component may not fully reflect your personal inflation experience, as it is based on the CPI-U, which measures the average change in prices for a basket of goods and services consumed by urban households.
  • Purchase limits: You can only buy up to $10,000 of electronic I bonds and $5,000 of paper I bonds per year per Social Security number or Employer Identification Number. This may limit your ability to diversify your portfolio or achieve your savings goals.

Should you buy Ibonds?

I bonds are a type of U.S. savings bond that offer tax advantages, low risk, and inflation protection. They are suitable for long-term savers who want to preserve their money’s value and avoid market fluctuations. However, they also have low liquidity, low returns, and purchase limits that may make them less attractive for some investors.

If you want to buy I bonds, you can do so online through TreasuryDirect or with your tax refund. You can choose between electronic or paper I bonds, depending on your preference and convenience. You can also redeem your I bonds through TreasuryDirect or a participating financial institution after one year, but you may incur a penalty if you do so within five years.

I bonds are one of the many options available for saving and investing your money. You should always compare different types of securities and consider your risk tolerance, time horizon, and financial goals before making any investment decision.

David Baughier

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