Should you buy Series I bonds amid higher inflation? What experts say

As consumer prices climb amid the Iran war, some investors are looking for ways to combat inflation.

One option, Series I bonds — a government-backed, nearly risk-free asset — could now be more attractive, some experts say. But others may prefer more flexible options.

Newly purchased I bonds will pay 4.26% annual interest through Oct. 31, up from the 4.03% yield offered through April 30, the U.S. Department of the Treasury announced last week.   

When inflation rises, "I bonds definitely have more appeal," said Ken Tumin, founder of DepositQuest.com, a blog that tracks I bond rates, among other deposit accounts.   

Demand has previously surged for I bonds amid soaring inflation. With yields tied to the consumer price index, I bond rates hit a record high of 9.62% in May 2022, and investors poured into the assets.

Many have redeemed I bonds as prices cooled. But there's been more interest since the March inflation data, according to David Enna, founder of Tipswatch.com, a website that tracks Treasury inflation-protected securities, or TIPS, and I bond rates.   

The consumer price index, or CPI, a key inflation gauge, increased 3.3% year over year in March 2026, up from 2.4% in February, the Bureau of Labor Statistics reported in April. This data reflected higher gasoline and other rising costs from the Iran war, and contributed to the latest 4.26% I bond rate.

"I think 4.26% is very competitive," compared to Treasury bills or money market funds, said Enna, who doesn't expect inflation to ease within the next few months.

As of May 4, most Treasury bills, or T-bills, with terms of four weeks to 52 weeks, were paying around 3.7%. Meanwhile, some of the biggest money market funds had similar yields, according to Crane Data.

While there's an I bond electronic purchase limit of $10,000 per person per year, Enna and Tumin both like asset for shorter-term cash, such as adding to an emergency fund, depending on your timeline.

I bond rates have a variable and fixed rate part. Upon purchase, you lock in a fixed rate, which is currently 0.90%, until you sell. But the variable portion, currently 3.34%, adjusts every six months, based on when you bought the asset.

If you're considering I bonds, it's important to know the trade-offs, particularly when compared to other assets, experts say.

I bonds aren't as flexible as T-bills, money market funds or high-yield savings accounts. For newly purchased I bonds, you can't access the money for at least one year, and there's a three-month interest penalty for selling within five years.

If your investing timeline is only around one year, Enna recommends T-bills over I bonds because the three-month interest penalty drags down your yield.

Plus, you must buy I bonds via TreasuryDirect, which is extra work if you don't have an existing account and aren't familiar with the platform, experts say.

"Overall, the hassle in dealing with them is not worth the menial marginal benefit on $10,000," said certified financial planner Dinon Hughes, partner with Nvest Financial in the greater Boston area.