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

Now that Series I bonds pay higher interest , the government-backed, nearly risk-free asset could be more attractive for certain investors. But I bonds have downsides, and there are alternatives to consider. Newly purchased I bonds currently pay 5.51% annual interest through April 30, up from the 4.26% yield offered on purchases made through October. Amid rising inflation , the variable part of I bond interest rose to 4.08%, while the fixed part increased to 1.40%, the highest since 2006. Combined, the 5.51% composite rate is the biggest yield since November 2022. The new I bond rate is "very attractive," according to Ken Tumin, founder of DepositQuest.com, a blog that tracks I bond rates, among other deposit accounts.