With Inflation Rising, Consider the Humdrum U.S. Savings Bond

There are some details about the I bonds to keep in mind.

First, there’s a limit on how much you can invest. You can buy up to $10,000 per year, per person, in digital I bonds through Treasury Direct, a website operated by the Bureau of the Fiscal Service, which is part of the Treasury Department. (Savings bonds can no longer be bought at bank branches.)

You can also buy an extra $5,000 in paper I bonds each year using your income tax refund. (Buying with a tax refund is the only way left to buy traditional, nonelectronic savings bonds).

A couple, then, could buy up to $30,000 in I bonds for themselves annually. They could also buy more to give to someone as a gift.

Another downside: You must hold a bond for 12 months. The government won’t redeem it earlier. So be careful before putting your entire emergency fund into I bonds, Mr. Mardock said — you can’t convert them to cash for a year.

“The catch is, it’s not as liquid as a savings account,” Mr. Tumin said.

And be aware that if you cash out before holding a bond for five years, you will have to pay back the last three months of interest. Even so, given that the bonds are currently paying a higher rate than other savings options, you’ll probably come out ahead even if you pay the penalty, Mr. Tumin said.

Here are some questions and answers about Series I savings bonds:

Is there a minimum purchase amount?

Yes. The minimum purchase is $25 for electronic bonds and $50 for paper.

To buy the bonds (unless you’re using a tax refund), you’ll need to create a Treasury Direct account and link it to your bank account. You can buy digital bonds in any amount, to the penny, as long as it’s over $25.

Paper bonds, bought at tax time, come in denominations of $50, $100, $200, $500 and $1,000.

Savings bonds aren’t sold through brokers, which is one reason some people aren’t familiar with them. There is no commission.