I Bonds Can Help Protect Your Savings in the Face of Inflation

Today’s high inflation rate is eating away at the value of savings accounts.

Withprices 8.6% higherthan this time last year, any money earning less than that loses buying power.

To prevent devaluation,Series I Savings Bondsare designed to track inflation.

Known as I bonds, these are relatively stable government-backed investments sold directly to the public.

The interest rates change every six months but reflect the most recent inflation stats.

If you buy an I bond through October, it will carry aninterest rate of 9.62%.

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Are I bonds the right move for growing your savings?

Here’s what it’s crucial that you know.

For reference, 2% inflation per year is considered healthy for the economy.

Meanwhile, theaverage interest rate for a savings account is 0.06%.

This is where I bonds come in.

The fixed rate is set by the US Treasury, which is the federal agency that issues the bonds.

Currently, thefixed rate for I bondsis 0%.

The derivative inflation rate is also adjusted twice a year.

This data comes from theBureau of Labor Statistics, which publishes Consumer Price Index data every month.

I bond interest rates are updated on the first business days of May and November.

There are two major catches.

First, you’re free to only buy up to $10,000 in I bonds.

This cap may limit the usefulness of I bonds on preserving the value of your savings.

You only get paid the full interest rate if you keep the bond for at least five years.