I bonds now pay 5.51% — but there are trade-offs. What to know before buying

U.S. Series I savings bonds are now yielding 5.51%, offering savers an inflation-protected return, though the rate comes with trade-offs that financial experts say investors should weigh before buying. The composite rate combines a fixed rate, which stays for the bond's 30-year life, with a semiannual inflation adjustment, meaning future payouts will fluctuate with CPI data. Buyers face a one-year minimum holding period, and redeeming within the first five years forfeits the last three months of interest, limiting liquidity. Annual purchase caps also restrict how much can be bought, making I bonds a complement to—not a substitute for—a broader savings strategy. The appeal comes as elevated inflation and higher short-term rates make competitive yields harder to find elsewhere. Watch for the next Treasury inflation adjustment, which will reset the variable component and could change the yield for new buyers.