New I bonds will pay 5.51%, with the highest fixed rate since 2006

Series I savings bonds bought from Nov. 1 through April 30, 2027, will earn a 5.51% annual rate, up from 4.26% for bonds bought from May through October, the Treasury Department said Friday. The rate combines a fixed rate of 1.40%, up from 0.90%, and a semiannual inflation rate of 2.04%, which is based on changes in the consumer price index. The fixed rate is the highest since November 2006 and stays with a bond for its life, while the inflation portion resets every six months. I bonds can't be cashed in during the first year, and bonds redeemed within five years give up the last three months of interest.

Why it matters: I bonds are designed to keep savings in step with inflation. The new rate gives savers a higher inflation-linked return on purchases over the next six months, and existing bondholders' rates adjust on a six-month schedule tied to their purchase date.