I bonds now pay 5.51% through April

Newly purchased Series I bonds pay 5.51% annual interest through April 30, up from 4.26% offered through October. This is the highest composite rate since November 2022.

Two parts make up the new rate

The variable part of I bond interest rose to 4.08%, while the fixed part increased to 1.40%, the highest since 2006. The variable part resets every six months based on the consumer price index.

Ken Tumin calls the rate very attractive

Ken Tumin, founder of DepositQuest.com, says the new I bond rate is very attractive and looks very competitive compared to savings accounts or certificates of deposit for shorter-term cash.

“very attractive”

Purchase limits and lock-up periods apply

Investors can buy ten thousand dollars of electronic I bonds per person per calendar year via TreasuryDirect.

I bonds work best as secondary savings

David Enna, founder of Tipswatch.com, recommends I bonds as a secondary emergency fund to boost reserves beyond the three to six months of living expenses advisors typically recommend keeping in cash.

“a secondary emergency fund”

Eileen Olson prefers TIPS for most clients

Certified financial planner Eileen Olson says I bonds are more hassle than they are worth.On a two million dollar portfolio, the ten thousand dollar annual limit is only 0.

“more hassle than they're worth”

TIPS offer higher yields without limits

TIPS have five, ten and thirty-year terms with yields ranging from about 2.3% to above 3% for the thirty-year term as of November 2.

Other alternatives offer simpler options

Treasury bills with terms from four weeks to fifty-two weeks were yielding well over 4% as of November 2.