The Benefits of I Bonds vs EE Bonds To Store Your Savings (2024)

Series I bonds and EE bonds are popular U.S. savings bonds that offer a safe way to save. Choosing between the two can be difficult. The best place to start is to gain an understanding of the terms of each bond and then compare the benefits and drawbacks of each.

Both bonds are solid investments that have minimal risk and virtually guarantee a return. You can’t go wrong in this situation. You can only do better.

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I Bonds vs EE Bonds
Header Cell - Column 0 I Bonds- ElectronicI Bonds- PaperEE-Bonds
How to buyFrom onlyCan only be purchased using your income tax refund. Use Form 8888From only
Interest rateTwo rates - a fixed rate and a variable rateSameRate when purchased is locked in for 20 years, It may be adjusted after 20 years
Row 2 - Cell 0 The fixed rate is set on the date you buy the bond and remains the same for the entire term. The variable rate is adjusted for inflation twice a yearSameN/A
Earns interestEarned semi-yearly and added to the principalSameSame
Minimum per transactionElectronic I-bonds: $25 minimum or any amount above that to the pennyPaper I-bonds: $50Same
Maximum purchase, per social security number$10,000 per year of electronic bonds$5,000 of paper bonds Paper bonds can only be purchased using a refund from your tax return$10,000 per year of electronic bonds. These are not sold as paper bonds
Liquidity/Marketability Can never be sold on the open market — only redeemed. Can’t be redeemed for the first year, and there’s a penalty (loss of last three months' worth of interest) for redeeming within the first five yearsSameSame
Tax treatmentSubject to federal income tax? Yes Subject to state and local income tax? NoSameSame
Exclusion from federal income taxYou may not have to pay tax on the earnings if you use the money for qualified higher education expenses and you don't exceed the income limitsSameSame
How to redeemAccess your TreasuryDirect account, go to ManageDirect and use the link for cashing in securitiesAt the bank where you have an account or by mail. Fill it out and remit FS Form 1522. If the value of the bond(s) you are cashing is more than $1,000, you must have your signature certified. Send the form and the bonds to the address printed on the FormAccess your TreasuryDirect account, go to ManageDirect and use the link for cashing in securities

I bonds


  • Inflation protection. One of the standout benefits of I bonds is the built-in inflation protection. Because part of the interest rate is adjusted semi-annually for inflation, it can help preserve the purchasing power of your investment.
  • Can buy more I bonds than EE bonds. You can buy an additional $5,000 in paper bonds with your income tax refund.


  • Modest returns in low inflation. In periods of low inflation, the returns can be modest. Since the interest rate of I bonds is partly tied to inflation, low inflation can result in lower yields.
  • Variable interest rates are a risk you can't discount when you buy an I bond, and it's not like you can just sell the bond when the rate falls. You're locked in for the first year.

EE bonds


  • Guaranteed returns. One of the most attractive benefits of EE bonds is the guaranteed return. The U.S. Treasury pledges that these bonds will double in value if held for 20 years, translating to an effective interest rate of about 3.5% per year over that period.
  • Stability: EE bonds offer a stable, predictable return, making them an excellent choice for conservative investors.


  • Lack of inflation protection: The primary risk associated with EE bonds is the lack of protection against inflation. The fixed interest rate does not adjust for inflation, meaning that if inflation rises significantly, it can erode the purchasing power of the bond's return.
  • Limited yield potential: EE bonds are a secure and low-risk investment, but they also come with lower returns than riskier investments such as stocks or mutual funds. Therefore, they may not be the best choice for those seeking higher returns and willing to accept higher risk.

I bonds offer an inflation-protected return, ensuring your savings keep pace with rising costs. EE bonds, on the other hand, provide a fixed-interest rate for the life of the bond, offering a predictable return.

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Benefits of both I bonds and EE bonds:

Tax advantages. Both I bonds and EE bonds offer tax advantages, including federal tax deferral until the bond is redeemed or reaches maturity, and exemption from state and local taxes. If used for educational expenses, they may be free from federal tax as well.

Safety: As a product of the U.S. Treasury, I and EE bonds come with a high degree of safety. They are backed by the full faith and credit of the U.S. government, which significantly lowers the risk of default.

Risks of both I bonds and EE bonds:

Early redemption penalties: While you can cash in I and EE bonds after one year, if you do so within the first five years, you'll lose the last three months' interest. This penalty can reduce your returns if you need to access your money early.

Limit on purchases: There's a limit on how much you can invest in I bonds and EE bonds each year.

Current interest rates

Interest rates for EE and I bonds reset every May and November. The last reset was on November 1, 2023.

For I bonds issued from November 1, 2023 through April 30, 2024, the current rate of interest is 5.27%. This includes a fixed rate of 1.30%. Although the new rates are announced in May and November, the date when the rate changes for your bond is every 6 months from the issue date of your bond.

EE bonds issued from November 1, 2023 through April 30, 2024 bear an interest rate of 2.70%. They will earn that interest rate for the first 20 years you hold the bond and may be adjusted after 20 years.

Bottom line

I bonds, with their inflation-adjusted return, safeguard the investor's purchasing power during periods of high inflation. On the other hand, EE Bonds offer predictable returns with a fixed-interest rate and a guaranteed doubling of value if held for 20 years. Both share similar tax considerations, providing federal tax deferral and state and local tax exemption.

The fundamental difference between them is the variable inflation interest rate offered by I bonds and the guaranteed 20 year doubling for EE bonds. I bond investors enjoy great flexibility. If inflation remains high, they can retain their bonds and profit. If inflation plummets, they can swap their securities for higher-paying conventional notes. Meanwhile, those who own EE bonds are stuck.

While I bonds can offer better protection in inflationary times, EE bonds offer stability even in volatile market conditions. Their relevance in your portfolio varies with market conditions and personal investment goals.

Related Content

  • How to Cash in Savings Bonds
  • What Are I-Bonds?
  • I-Bonds Pros and Cons
  • Savings Calculator: Check How Much Your Money Will Grow
The Benefits of I Bonds vs EE Bonds To Store Your Savings (2024)


The Benefits of I Bonds vs EE Bonds To Store Your Savings? ›

Series I bonds provide a greater level of protection against inflation than do Series EE bonds: They come with a combination of a guaranteed fixed rate and a variable inflation rate that is set twice a year, based on the consumer price index.

Which is better, EE bonds or I bonds? ›

Bottom line. I bonds, with their inflation-adjusted return, safeguard the investor's purchasing power during periods of high inflation. On the other hand, EE Bonds offer predictable returns with a fixed-interest rate and a guaranteed doubling of value if held for 20 years.

What is the downside to I bonds? ›

Key Points. Pros: I bonds come with a high interest rate during inflationary periods, they're low-risk, and they help protect against inflation. Cons: Rates are variable, there's a lockup period and early withdrawal penalty, and there's a limit to how much you can invest.

Are I bonds better than a savings account? ›

Higher rate of return: Currently, the combined rate of I bonds is set at 5.27%, which is significantly higher than the average return you'd find with a traditional savings account, money market account , or certificate of deposit (CD).

Do EE bonds really double in 20 years? ›

EE bonds you buy now have a fixed interest rate that you know when you buy the bond. That rate remains the same for at least the first 20 years. It may change after that for the last 10 of its 30 years. We guarantee that the value of your new EE bond at 20 years will be double what you paid for it.

How much is a $100 EE savings bond worth after 30 years? ›

How to get the most value from your savings bonds
Face ValuePurchase Amount30-Year Value (Purchased May 1990)
$50 Bond$100$207.36
$100 Bond$200$414.72
$500 Bond$400$1,036.80
$1,000 Bond$800$2,073.60

What are the disadvantages of TreasuryDirect? ›

Securities purchased through TreasuryDirect cannot be sold in the secondary market before they mature. This lack of liquidity could be a disadvantage for investors who may need to access their investment capital before the securities' maturity.

Can you ever lose money on an I bond? ›

You can count on a Series I bond to hold its value; that is, the bond's redemption value will not decline. Question: What is the inflation rate? November 1 of each year. For example, the earnings rate announced on May 1 reflects an inflation rate from the previous October through March.

Is it possible to lose money on I bonds? ›

“With I bonds, your principal is protected and safe. However, if you cash the bond out before five years, then you will lose up to the last three months of accrued interest.

Should I buy series EE or series I savings bonds? ›

It is part of your long term fixed income allocation. In that case, I will still recommend I bonds over EE bonds. It will provide some inflation protection in case inflation gets high again. The fixed rate of 1.3% is good for an I bond.

Are bonds safe if the market crashes? ›

Yes, you can lose money investing in bonds if the bond issuer defaults on the loan or if you sell the bond for less than you bought it for. Are bonds safe if the market crashes? Even if the stock market crashes, you aren't likely to see your bond investments take large hits.

Is there anything better than I bonds? ›

Unlike I-bonds, TIPS are marketable securities and can be resold on the secondary market before maturity. When the TIPS matures, if the principal is higher than the original amount, you get the increased amount. If the principal is equal to or lower than the original amount, you get the original amount.

Do you pay taxes on I bonds? ›

More about savings bonds

The interest earned by purchasing and holding savings bonds is subject to federal tax at the time the bonds are redeemed. However, interest earned on savings bonds is not taxable at the state or local level.

When should I cash in EE savings bonds? ›

You can get your cash for an EE or I savings bond any time after you have owned it for 1 year. However, the longer you hold the bond, the more it earns for you (for up to 30 years for an EE or I bond). Also, if you cash in the bond in less than 5 years, you lose the last 3 months of interest.

How long does it take for a $100 EE savings bond to mature? ›

Currently, EE bonds reach full maturity after 30 years, but are guaranteed to double in value in the first 20 years. However, maturity dates for EE bonds used to be less than 30 years.

Why would anyone buy EE bonds? ›

Series EE savings bonds are a low-risk way to save money. They earn interest regularly for 30 years (or until you cash them if you do that before 30 years). For EE bonds you buy now, we guarantee that the bond will double in value in 20 years, even if we have to add money at 20 years to make that happen.

Can I buy $10,000 i bond every year? ›

One increasingly popular pick are I Bonds, savings bonds issued by the U.S. government. These bonds are virtually risk free and have a robust fixed interest rate. There is generally a $10,000 limit per year for purchasing I Bonds, but there are a few ways to get around this limit.

What is the best savings bond to buy today? ›

9 of the Best Bond ETFs to Buy Now
ETFExpense ratioYield to maturity
Global X 1-3 Month T-Bill ETF (CLIP)0.07%5.5%
SPDR Portfolio Corporate Bond ETF (SPBO)0.03%5.5%
JPMorgan Ultra-Short Income ETF (JPST)0.18%5.5%
iShares 7-10 Year Treasury Bond ETF (IEF)0.15%4.4%
5 more rows
Apr 8, 2024

How long should you hold series I bonds? ›

You can cash in (redeem) your I bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest.

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