I-Bonds: inflation-protected savings
A government savings bond whose interest rate adjusts with inflation. Useful for medium-term savings, with some annoying restrictions.
Written for plain-English understanding by Joseph Citizen. Why I built this →
Series I Savings Bonds — usually called I-Bonds — are US savings bonds whose interest rate has two parts: a fixed rate that stays the same for the life of the bond, and a variable rate that adjusts every six months based on inflation.
Why people use them
- Guaranteed to keep up with inflation — your purchasing power doesn't erode
- Backed by the US government — no default risk
- Federal income tax deferred until you cash out; exempt from state and local tax
- Can be tax-free if used for qualified education expenses
The annoying restrictions
- $10,000 per person per year purchase limit (electronic)
- Must be held at least 1 year — no early withdrawal allowed
- Withdraw before 5 years and you forfeit the last 3 months of interest
- Only sold through TreasuryDirect.gov, which has a clunky interface
When they make sense
Money you won't need for at least 5 years, but want kept safe with inflation protection. Not for emergency funds (locked up), not for long-term retirement (stocks usually do better), but useful as a middle layer.
Keep the momentum going.
Credit unions vs. banks: what's the difference?
Credit unions are nonprofits owned by their members. They often pay better rates and charge lower fees. Here's the trade-off.
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Important
This lesson is general financial education only. It is not personal investment, tax, accounting, or legal advice. Examples are illustrative. Past performance does not guarantee future results.