The U.S. Treasury has announced a new 4.03% rate for Series I savings bonds, effective from November 1, 2025, through April 30, 2026. The rate marks a modest increase from the previous 3.98%, offering investors a slightly higher return on one of the government’s most secure, inflation-linked assets.
The new composite rate is made up of two parts — a variable rate of 3.12% based on recent inflation data and a fixed rate of 0.90%, which will remain constant for the life of the bond. Together, they form the 4.03% annualized yield. While the fixed rate is slightly lower than the 1.10% offered in May, the uptick in the inflation component helped push the total return higher.
I Bonds surged in popularity in 2022 when the rate peaked at a record 9.62%, drawing massive inflows from investors looking for a safe hedge against inflation. Though inflation has since cooled, many savers have continued to hold onto their bonds, while new buyers have taken advantage of the relatively high fixed-rate portion compared to previous years.
For many households, I Bonds remain an appealing middle ground — providing government-backed security while outpacing many savings accounts and CDs. The interest compounds semiannually, and investors can hold the bonds for up to 30 years, though early redemptions before five years forfeit the last three months of interest.
The Treasury adjusts I Bond rates twice a year — in May and November — based on the Consumer Price Index. Each investor’s bond earns the announced variable rate for six months from the purchase date, regardless of subsequent changes. The fixed rate, however, is locked in for the full duration of ownership.
For example, an investor who bought I Bonds in March 2025 would have earned a 1.90% variable rate for the first six months and automatically shifted to 2.86% this September, creating a composite yield of about 4.06%.
The new rate is likely to draw fresh attention from retail investors seeking low-risk returns amid ongoing market volatility and uncertainty around the Federal Reserve’s path on rates. For many smaller investors, I Bonds offer a stable complement to more speculative holdings such as tech or small-cap equities.
However, higher government-backed yields can also divert short-term capital away from small-cap stocks, which often depend on investor risk appetite to attract flows. As safer assets like I Bonds and Treasuries become more rewarding, some investors may opt to park cash in guaranteed instruments instead of chasing growth in volatile small-cap or emerging sectors.
Still, for disciplined investors, this shift could create buying opportunities in undervalued small-cap names as liquidity temporarily moves toward fixed income.
The Treasury’s latest adjustment makes I Bonds slightly more attractive for conservative investors, even as broader market participants navigate mixed signals from the Fed and bond markets. For small investors, they remain a solid inflation hedge — and for opportunistic traders, the reallocation trend could open new value pockets in smaller-cap stocks.
